Correlation Between Bank of Utica and North Dallas
Can any of the company-specific risk be diversified away by investing in both Bank of Utica and North Dallas 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 Bank of Utica and North Dallas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Utica and North Dallas Bank, you can compare the effects of market volatilities on Bank of Utica and North Dallas 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 Bank of Utica with a short position of North Dallas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Utica and North Dallas.
Diversification Opportunities for Bank of Utica and North Dallas
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and North is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Utica and North Dallas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Dallas Bank and Bank of Utica 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 Bank of Utica are associated (or correlated) with North Dallas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Dallas Bank has no effect on the direction of Bank of Utica i.e., Bank of Utica and North Dallas go up and down completely randomly.
Pair Corralation between Bank of Utica and North Dallas
Given the investment horizon of 90 days Bank of Utica is expected to generate 1.3 times more return on investment than North Dallas. However, Bank of Utica is 1.3 times more volatile than North Dallas Bank. It trades about 0.35 of its potential returns per unit of risk. North Dallas Bank is currently generating about 0.34 per unit of risk. If you would invest 45,000 in Bank of Utica on August 28, 2024 and sell it today you would earn a total of 3,800 from holding Bank of Utica or generate 8.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Utica vs. North Dallas Bank
Performance |
| Timeline |
| Bank of Utica |
| North Dallas Bank |
Bank of Utica and North Dallas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Utica and North Dallas
The main advantage of trading using opposite Bank of Utica and North Dallas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Utica position performs unexpectedly, North Dallas 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 North Dallas will offset losses from the drop in North Dallas' long position.The idea behind Bank of Utica and North Dallas Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| North Dallas vs. CCSB Financial Corp | North Dallas vs. Delhi Bank Corp | North Dallas vs. Bank of Utica | North Dallas vs. First Community |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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