Correlation Between Bridgewater Bancshares and Associated Banc

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Can any of the company-specific risk be diversified away by investing in both Bridgewater Bancshares and Associated Banc 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 Bridgewater Bancshares and Associated Banc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgewater Bancshares Depositary and Associated Banc Corp, you can compare the effects of market volatilities on Bridgewater Bancshares and Associated Banc 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 Bridgewater Bancshares with a short position of Associated Banc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgewater Bancshares and Associated Banc.

Diversification Opportunities for Bridgewater Bancshares and Associated Banc

0.1
  Correlation Coefficient

Average diversification

The 3 months correlation between Bridgewater and Associated is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Bridgewater Bancshares Deposit and Associated Banc Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Banc Corp and Bridgewater Bancshares 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 Bridgewater Bancshares Depositary are associated (or correlated) with Associated Banc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Banc Corp has no effect on the direction of Bridgewater Bancshares i.e., Bridgewater Bancshares and Associated Banc go up and down completely randomly.

Pair Corralation between Bridgewater Bancshares and Associated Banc

Assuming the 90 days horizon Bridgewater Bancshares Depositary is expected to generate 1.12 times more return on investment than Associated Banc. However, Bridgewater Bancshares is 1.12 times more volatile than Associated Banc Corp. It trades about -0.01 of its potential returns per unit of risk. Associated Banc Corp is currently generating about -0.05 per unit of risk. If you would invest  1,950  in Bridgewater Bancshares Depositary on November 18, 2024 and sell it today you would lose (5.00) from holding Bridgewater Bancshares Depositary or give up 0.26% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Bridgewater Bancshares Deposit  vs.  Associated Banc Corp

 Performance 
       Timeline  
Bridgewater Bancshares 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Bridgewater Bancshares Depositary has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Bridgewater Bancshares is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Associated Banc Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Associated Banc Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Associated Banc is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Bridgewater Bancshares and Associated Banc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bridgewater Bancshares and Associated Banc

The main advantage of trading using opposite Bridgewater Bancshares and Associated Banc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgewater Bancshares position performs unexpectedly, Associated Banc 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 Associated Banc will offset losses from the drop in Associated Banc's long position.
The idea behind Bridgewater Bancshares Depositary and Associated Banc Corp 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.
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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