Correlation Between Bank of Marin and Ames National
Can any of the company-specific risk be diversified away by investing in both Bank of Marin and Ames National 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 Marin and Ames National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Marin and Ames National, you can compare the effects of market volatilities on Bank of Marin and Ames National 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 Marin with a short position of Ames National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Marin and Ames National.
Diversification Opportunities for Bank of Marin and Ames National
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Ames is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Marin and Ames National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ames National and Bank of Marin 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 Marin are associated (or correlated) with Ames National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ames National has no effect on the direction of Bank of Marin i.e., Bank of Marin and Ames National go up and down completely randomly.
Pair Corralation between Bank of Marin and Ames National
Given the investment horizon of 90 days Bank of Marin is expected to generate 1.64 times more return on investment than Ames National. However, Bank of Marin is 1.64 times more volatile than Ames National. It trades about 0.21 of its potential returns per unit of risk. Ames National is currently generating about 0.06 per unit of risk. If you would invest 2,251 in Bank of Marin on August 27, 2024 and sell it today you would earn a total of 382.00 from holding Bank of Marin or generate 16.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Marin vs. Ames National
Performance |
| Timeline |
| Bank of Marin |
| Ames National |
Bank of Marin and Ames National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Marin and Ames National
The main advantage of trading using opposite Bank of Marin and Ames National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Marin position performs unexpectedly, Ames National 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 Ames National will offset losses from the drop in Ames National's long position.| Bank of Marin vs. Fifth Third Bancorp | Bank of Marin vs. Zions Bancorporation | Bank of Marin vs. Huntington Bancshares Incorporated | Bank of Marin vs. Comerica |
| Ames National vs. First Community | Ames National vs. Old Point Financial | Ames National vs. Oak Valley Bancorp | Ames National vs. Chemung Financial Corp |
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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