Correlation Between ChoiceOne Financial and Isabella Bank
Can any of the company-specific risk be diversified away by investing in both ChoiceOne Financial and Isabella Bank 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 ChoiceOne Financial and Isabella Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChoiceOne Financial Services and Isabella Bank, you can compare the effects of market volatilities on ChoiceOne Financial and Isabella Bank 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 ChoiceOne Financial with a short position of Isabella Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChoiceOne Financial and Isabella Bank.
Diversification Opportunities for ChoiceOne Financial and Isabella Bank
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ChoiceOne and Isabella is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding ChoiceOne Financial Services and Isabella Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isabella Bank and ChoiceOne Financial 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 ChoiceOne Financial Services are associated (or correlated) with Isabella Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isabella Bank has no effect on the direction of ChoiceOne Financial i.e., ChoiceOne Financial and Isabella Bank go up and down completely randomly.
Pair Corralation between ChoiceOne Financial and Isabella Bank
Given the investment horizon of 90 days ChoiceOne Financial Services is expected to generate 1.13 times more return on investment than Isabella Bank. However, ChoiceOne Financial is 1.13 times more volatile than Isabella Bank. It trades about 0.03 of its potential returns per unit of risk. Isabella Bank is currently generating about 0.03 per unit of risk. If you would invest 2,630 in ChoiceOne Financial Services on November 19, 2024 and sell it today you would earn a total of 623.00 from holding ChoiceOne Financial Services or generate 23.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 83.43% |
| Values | Daily Returns |
ChoiceOne Financial Services vs. Isabella Bank
Performance |
| Timeline |
| ChoiceOne Financial |
| Isabella Bank |
ChoiceOne Financial and Isabella Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChoiceOne Financial and Isabella Bank
The main advantage of trading using opposite ChoiceOne Financial and Isabella Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChoiceOne Financial position performs unexpectedly, Isabella Bank 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 Isabella Bank will offset losses from the drop in Isabella Bank's long position.| ChoiceOne Financial vs. Home Federal Bancorp | ChoiceOne Financial vs. First Northwest Bancorp | ChoiceOne Financial vs. Lake Shore Bancorp | ChoiceOne Financial vs. Affinity Bancshares |
| Isabella Bank vs. Home Federal Bancorp | Isabella Bank vs. Magyar Bancorp | Isabella Bank vs. ChoiceOne Financial Services | Isabella Bank vs. Heritage Commerce Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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