Correlation Between Commercial National and Katahdin Bankshares
Can any of the company-specific risk be diversified away by investing in both Commercial National and Katahdin Bankshares 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 Commercial National and Katahdin Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial National Financial and Katahdin Bankshares Corp, you can compare the effects of market volatilities on Commercial National and Katahdin Bankshares 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 Commercial National with a short position of Katahdin Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial National and Katahdin Bankshares.
Diversification Opportunities for Commercial National and Katahdin Bankshares
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Commercial and Katahdin is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Commercial National Financial and Katahdin Bankshares Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Katahdin Bankshares Corp and Commercial National 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 Commercial National Financial are associated (or correlated) with Katahdin Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Katahdin Bankshares Corp has no effect on the direction of Commercial National i.e., Commercial National and Katahdin Bankshares go up and down completely randomly.
Pair Corralation between Commercial National and Katahdin Bankshares
Given the investment horizon of 90 days Commercial National Financial is expected to generate 2.14 times more return on investment than Katahdin Bankshares. However, Commercial National is 2.14 times more volatile than Katahdin Bankshares Corp. It trades about 0.14 of its potential returns per unit of risk. Katahdin Bankshares Corp is currently generating about -0.27 per unit of risk. If you would invest 1,020 in Commercial National Financial on October 29, 2024 and sell it today you would earn a total of 55.00 from holding Commercial National Financial or generate 5.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial National Financial vs. Katahdin Bankshares Corp
Performance |
| Timeline |
| Commercial National |
| Katahdin Bankshares Corp |
Commercial National and Katahdin Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial National and Katahdin Bankshares
The main advantage of trading using opposite Commercial National and Katahdin Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial National position performs unexpectedly, Katahdin Bankshares 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 Katahdin Bankshares will offset losses from the drop in Katahdin Bankshares' long position.| Commercial National vs. Eastern Michigan Financial | Commercial National vs. Mifflinburg Bancorp | Commercial National vs. Apollo Bancorp | Commercial National vs. Community Bankers |
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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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