Correlation Between Black Hills and BCB Bancorp
Can any of the company-specific risk be diversified away by investing in both Black Hills and BCB Bancorp 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 Black Hills and BCB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Hills and BCB Bancorp, you can compare the effects of market volatilities on Black Hills and BCB Bancorp 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 Black Hills with a short position of BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hills and BCB Bancorp.
Diversification Opportunities for Black Hills and BCB Bancorp
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Black and BCB is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp and Black 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 Black Hills are associated (or correlated) with BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of Black Hills i.e., Black Hills and BCB Bancorp go up and down completely randomly.
Pair Corralation between Black Hills and BCB Bancorp
Considering the 90-day investment horizon Black Hills is expected to generate 2.36 times less return on investment than BCB Bancorp. But when comparing it to its historical volatility, Black Hills is 2.11 times less risky than BCB Bancorp. It trades about 0.11 of its potential returns per unit of risk. BCB Bancorp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 961.00 in BCB Bancorp on August 30, 2024 and sell it today you would earn a total of 380.00 from holding BCB Bancorp or generate 39.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Hills vs. BCB Bancorp
Performance |
| Timeline |
| Black Hills |
| BCB Bancorp |
Black Hills and BCB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Hills and BCB Bancorp
The main advantage of trading using opposite Black Hills and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills position performs unexpectedly, BCB Bancorp 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's long position.| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
| BCB Bancorp vs. SVB T Corp | BCB Bancorp vs. First Capital | BCB Bancorp vs. Pioneer Bankcorp | BCB Bancorp vs. Liberty Northwest Bancorp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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