Correlation Between ChoiceOne Financial and Lakeland Financial
Can any of the company-specific risk be diversified away by investing in both ChoiceOne Financial and Lakeland Financial 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 Lakeland Financial 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 Lakeland Financial, you can compare the effects of market volatilities on ChoiceOne Financial and Lakeland Financial 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 Lakeland Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChoiceOne Financial and Lakeland Financial.
Diversification Opportunities for ChoiceOne Financial and Lakeland Financial
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ChoiceOne and Lakeland is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ChoiceOne Financial Services and Lakeland Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland Financial 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 Lakeland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Financial has no effect on the direction of ChoiceOne Financial i.e., ChoiceOne Financial and Lakeland Financial go up and down completely randomly.
Pair Corralation between ChoiceOne Financial and Lakeland Financial
Given the investment horizon of 90 days ChoiceOne Financial is expected to generate 1.01 times less return on investment than Lakeland Financial. But when comparing it to its historical volatility, ChoiceOne Financial Services is 1.5 times less risky than Lakeland Financial. It trades about 0.29 of its potential returns per unit of risk. Lakeland Financial is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 6,602 in Lakeland Financial on August 30, 2024 and sell it today you would earn a total of 848.00 from holding Lakeland Financial or generate 12.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ChoiceOne Financial Services vs. Lakeland Financial
Performance |
| Timeline |
| ChoiceOne Financial |
| Lakeland Financial |
ChoiceOne Financial and Lakeland Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChoiceOne Financial and Lakeland Financial
The main advantage of trading using opposite ChoiceOne Financial and Lakeland Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChoiceOne Financial position performs unexpectedly, Lakeland Financial 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 Lakeland Financial will offset losses from the drop in Lakeland Financial'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 |
| Lakeland Financial vs. Home Bancorp | Lakeland Financial vs. Heritage Financial | Lakeland Financial vs. First Northwest Bancorp | Lakeland Financial vs. HomeTrust Bancshares |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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