Correlation Between Community Bank and LINKBANCORP
Can any of the company-specific risk be diversified away by investing in both Community Bank and LINKBANCORP 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 Community Bank and LINKBANCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Community Bank System and LINKBANCORP, you can compare the effects of market volatilities on Community Bank and LINKBANCORP 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 Community Bank with a short position of LINKBANCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Bank and LINKBANCORP.
Diversification Opportunities for Community Bank and LINKBANCORP
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Community and LINKBANCORP is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Community Bank System and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP and Community Bank 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 Community Bank System are associated (or correlated) with LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of Community Bank i.e., Community Bank and LINKBANCORP go up and down completely randomly.
Pair Corralation between Community Bank and LINKBANCORP
Considering the 90-day investment horizon Community Bank System is expected to generate 1.28 times more return on investment than LINKBANCORP. However, Community Bank is 1.28 times more volatile than LINKBANCORP. It trades about 0.19 of its potential returns per unit of risk. LINKBANCORP is currently generating about 0.23 per unit of risk. If you would invest 6,100 in Community Bank System on August 29, 2024 and sell it today you would earn a total of 906.00 from holding Community Bank System or generate 14.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community Bank System vs. LINKBANCORP
Performance |
| Timeline |
| Community Bank System |
| LINKBANCORP |
Community Bank and LINKBANCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community Bank and LINKBANCORP
The main advantage of trading using opposite Community Bank and LINKBANCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Bank position performs unexpectedly, LINKBANCORP 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 LINKBANCORP will offset losses from the drop in LINKBANCORP's long position.| Community Bank vs. National Bank Holdings | Community Bank vs. Byline Bancorp | Community Bank vs. Home Bancorp | Community Bank vs. Finward Bancorp |
| LINKBANCORP vs. Home Federal Bancorp | LINKBANCORP vs. Lake Shore Bancorp | LINKBANCORP vs. Community West Bancshares | LINKBANCORP vs. Magyar 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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