Correlation Between Burke Herbert and Washington Business
Can any of the company-specific risk be diversified away by investing in both Burke Herbert and Washington Business 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 Burke Herbert and Washington Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burke Herbert Financial and Washington Business Bank, you can compare the effects of market volatilities on Burke Herbert and Washington Business 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 Burke Herbert with a short position of Washington Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burke Herbert and Washington Business.
Diversification Opportunities for Burke Herbert and Washington Business
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Burke and Washington is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Burke Herbert Financial and Washington Business Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Business Bank and Burke Herbert 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 Burke Herbert Financial are associated (or correlated) with Washington Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Business Bank has no effect on the direction of Burke Herbert i.e., Burke Herbert and Washington Business go up and down completely randomly.
Pair Corralation between Burke Herbert and Washington Business
Given the investment horizon of 90 days Burke Herbert Financial is expected to generate 3.49 times more return on investment than Washington Business. However, Burke Herbert is 3.49 times more volatile than Washington Business Bank. It trades about 0.07 of its potential returns per unit of risk. Washington Business Bank is currently generating about 0.13 per unit of risk. If you would invest 5,360 in Burke Herbert Financial on September 3, 2024 and sell it today you would earn a total of 1,568 from holding Burke Herbert Financial or generate 29.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Burke Herbert Financial vs. Washington Business Bank
Performance |
| Timeline |
| Burke Herbert Financial |
| Washington Business Bank |
Burke Herbert and Washington Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burke Herbert and Washington Business
The main advantage of trading using opposite Burke Herbert and Washington Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burke Herbert position performs unexpectedly, Washington Business 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 Washington Business will offset losses from the drop in Washington Business' long position.| Burke Herbert vs. Private Bancorp of | Burke Herbert vs. Avidbank Holdings | Burke Herbert vs. American Business Bk | Burke Herbert vs. Home Federal Bancorp |
| Washington Business vs. First Hawaiian | Washington Business vs. Central Pacific Financial | Washington Business vs. Territorial Bancorp | Washington Business vs. Comerica |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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