Correlation Between Bank of Idaho and Freedom Bank
Can any of the company-specific risk be diversified away by investing in both Bank of Idaho and Freedom Bank 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 Idaho and Freedom Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Idaho and Freedom Bank of, you can compare the effects of market volatilities on Bank of Idaho and Freedom Bank 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 Idaho with a short position of Freedom Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Idaho and Freedom Bank.
Diversification Opportunities for Bank of Idaho and Freedom Bank
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Freedom is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Idaho and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank and Bank of Idaho 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 Idaho are associated (or correlated) with Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of Bank of Idaho i.e., Bank of Idaho and Freedom Bank go up and down completely randomly.
Pair Corralation between Bank of Idaho and Freedom Bank
Given the investment horizon of 90 days Bank of Idaho is expected to generate 0.68 times more return on investment than Freedom Bank. However, Bank of Idaho is 1.48 times less risky than Freedom Bank. It trades about 0.15 of its potential returns per unit of risk. Freedom Bank of is currently generating about 0.07 per unit of risk. If you would invest 3,100 in Bank of Idaho on September 12, 2024 and sell it today you would earn a total of 235.00 from holding Bank of Idaho or generate 7.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Idaho vs. Freedom Bank of
Performance |
| Timeline |
| Bank of Idaho |
| Freedom Bank |
Bank of Idaho and Freedom Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Idaho and Freedom Bank
The main advantage of trading using opposite Bank of Idaho and Freedom Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Idaho position performs unexpectedly, Freedom Bank 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 Freedom Bank will offset losses from the drop in Freedom Bank's long position.| Bank of Idaho vs. National Capital Bank | Bank of Idaho vs. Citizens Financial Corp | Bank of Idaho vs. Community Heritage Financial | Bank of Idaho vs. Lewis Clark Bancorp |
| Freedom Bank vs. National Capital Bank | Freedom Bank vs. Community Heritage Financial | Freedom Bank vs. Citizens Financial Corp | Freedom Bank vs. Bank of Idaho |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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