Correlation Between Bridgewater Bancshares and Texas Capital
Can any of the company-specific risk be diversified away by investing in both Bridgewater Bancshares and Texas Capital 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 Texas Capital 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 Texas Capital Bancshares, you can compare the effects of market volatilities on Bridgewater Bancshares and Texas Capital 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 Texas Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgewater Bancshares and Texas Capital.
Diversification Opportunities for Bridgewater Bancshares and Texas Capital
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bridgewater and Texas is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bridgewater Bancshares Deposit and Texas Capital Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital Bancshares 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 Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Bancshares has no effect on the direction of Bridgewater Bancshares i.e., Bridgewater Bancshares and Texas Capital go up and down completely randomly.
Pair Corralation between Bridgewater Bancshares and Texas Capital
Assuming the 90 days horizon Bridgewater Bancshares Depositary is expected to generate 1.6 times more return on investment than Texas Capital. However, Bridgewater Bancshares is 1.6 times more volatile than Texas Capital Bancshares. It trades about -0.01 of its potential returns per unit of risk. Texas Capital Bancshares is currently generating about -0.04 per unit of risk. If you would invest 1,954 in Bridgewater Bancshares Depositary on September 12, 2024 and sell it today you would lose (54.00) from holding Bridgewater Bancshares Depositary or give up 2.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bridgewater Bancshares Deposit vs. Texas Capital Bancshares
Performance |
| Timeline |
| Bridgewater Bancshares |
| Texas Capital Bancshares |
Bridgewater Bancshares and Texas Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgewater Bancshares and Texas Capital
The main advantage of trading using opposite Bridgewater Bancshares and Texas Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgewater Bancshares position performs unexpectedly, Texas Capital 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 Texas Capital will offset losses from the drop in Texas Capital's long position.| Bridgewater Bancshares vs. CNB Financial | Bridgewater Bancshares vs. First Guaranty Bancshares | Bridgewater Bancshares vs. Dime Community Bancshares | Bridgewater Bancshares vs. Brighthouse Financial |
| Texas Capital vs. Capital One Financial | Texas Capital vs. Capital One Financial | Texas Capital vs. Bank of America |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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