Correlation Between Cambridge Bancorp and American National
Can any of the company-specific risk be diversified away by investing in both Cambridge Bancorp and American 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 Cambridge Bancorp and American National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambridge Bancorp and American National Bankshares, you can compare the effects of market volatilities on Cambridge Bancorp and American 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 Cambridge Bancorp with a short position of American National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambridge Bancorp and American National.
Diversification Opportunities for Cambridge Bancorp and American National
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cambridge and American is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cambridge Bancorp and American National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American National and Cambridge Bancorp 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 Cambridge Bancorp are associated (or correlated) with American National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American National has no effect on the direction of Cambridge Bancorp i.e., Cambridge Bancorp and American National go up and down completely randomly.
Pair Corralation between Cambridge Bancorp and American National
Given the investment horizon of 90 days Cambridge Bancorp is expected to generate 1.34 times more return on investment than American National. However, Cambridge Bancorp is 1.34 times more volatile than American National Bankshares. It trades about 0.01 of its potential returns per unit of risk. American National Bankshares is currently generating about -0.04 per unit of risk. If you would invest 8,087 in Cambridge Bancorp on August 30, 2024 and sell it today you would lose (728.00) from holding Cambridge Bancorp or give up 9.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 38.85% |
| Values | Daily Returns |
Cambridge Bancorp vs. American National Bankshares
Performance |
| Timeline |
| Cambridge Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| American National |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cambridge Bancorp and American National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambridge Bancorp and American National
The main advantage of trading using opposite Cambridge Bancorp and American National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambridge Bancorp position performs unexpectedly, American 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 American National will offset losses from the drop in American National's long position.| Cambridge Bancorp vs. First Community | Cambridge Bancorp vs. Community West Bancshares | Cambridge Bancorp vs. First Financial Northwest | Cambridge Bancorp vs. First Northwest Bancorp |
| American National vs. First Northwest Bancorp | American National vs. Community West Bancshares | American National vs. First Financial Northwest | American National vs. Great Southern Bancorp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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