Correlation Between Berkshire Hills and National Capital
Can any of the company-specific risk be diversified away by investing in both Berkshire Hills and National Capital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Berkshire Hills and National Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hills Bancorp and National Capital Bank, you can compare the effects of market volatilities on Berkshire Hills and National Capital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Berkshire Hills with a short position of National Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hills and National Capital.
Diversification Opportunities for Berkshire Hills and National Capital
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Berkshire and National is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hills Bancorp and National Capital Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Capital Bank and Berkshire Hills is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Berkshire Hills Bancorp are associated (or correlated) with National Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Capital Bank has no effect on the direction of Berkshire Hills i.e., Berkshire Hills and National Capital go up and down completely randomly.
Pair Corralation between Berkshire Hills and National Capital
Given the investment horizon of 90 days Berkshire Hills is expected to generate 95.32 times less return on investment than National Capital. But when comparing it to its historical volatility, Berkshire Hills Bancorp is 43.31 times less risky than National Capital. It trades about 0.19 of its potential returns per unit of risk. National Capital Bank is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 4,693 in National Capital Bank on August 30, 2024 and sell it today you would earn a total of 19,307 from holding National Capital Bank or generate 411.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Berkshire Hills Bancorp vs. National Capital Bank
Performance |
| Timeline |
| Berkshire Hills Bancorp |
| National Capital Bank |
Berkshire Hills and National Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hills and National Capital
The main advantage of trading using opposite Berkshire Hills and National Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hills position performs unexpectedly, National Capital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in National Capital will offset losses from the drop in National Capital's long position.| Berkshire Hills vs. Finward Bancorp | Berkshire Hills vs. Community West Bancshares | Berkshire Hills vs. First Community | Berkshire Hills vs. First Capital |
| National Capital vs. Invesco High Income | National Capital vs. Blackrock Muniholdings Ny | National Capital vs. Nuveen California Select | National Capital vs. MFS Investment Grade |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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