Correlation Between Community Bankers and Potomac Bancshares
Can any of the company-specific risk be diversified away by investing in both Community Bankers and Potomac Bancshares 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 Bankers and Potomac Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Community Bankers and Potomac Bancshares, you can compare the effects of market volatilities on Community Bankers and Potomac Bancshares 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 Bankers with a short position of Potomac Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Bankers and Potomac Bancshares.
Diversification Opportunities for Community Bankers and Potomac Bancshares
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Community and Potomac is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Community Bankers and Potomac Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Potomac Bancshares and Community Bankers 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 Bankers are associated (or correlated) with Potomac Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Potomac Bancshares has no effect on the direction of Community Bankers i.e., Community Bankers and Potomac Bancshares go up and down completely randomly.
Pair Corralation between Community Bankers and Potomac Bancshares
Given the investment horizon of 90 days Community Bankers is expected to under-perform the Potomac Bancshares. In addition to that, Community Bankers is 1.42 times more volatile than Potomac Bancshares. It trades about -0.03 of its total potential returns per unit of risk. Potomac Bancshares is currently generating about 0.06 per unit of volatility. If you would invest 1,426 in Potomac Bancshares on September 1, 2024 and sell it today you would earn a total of 224.00 from holding Potomac Bancshares or generate 15.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community Bankers vs. Potomac Bancshares
Performance |
| Timeline |
| Community Bankers |
| Potomac Bancshares |
Community Bankers and Potomac Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community Bankers and Potomac Bancshares
The main advantage of trading using opposite Community Bankers and Potomac Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Bankers position performs unexpectedly, Potomac Bancshares 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 Potomac Bancshares will offset losses from the drop in Potomac Bancshares' long position.| Community Bankers vs. Piraeus Bank SA | Community Bankers vs. Turkiye Garanti Bankasi | Community Bankers vs. Delhi Bank Corp | Community Bankers vs. Uwharrie Capital Corp |
| Potomac Bancshares vs. Apollo Bancorp | Potomac Bancshares vs. The Farmers Bank | Potomac Bancshares vs. Community Bankers | Potomac Bancshares vs. CCSB Financial 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 CEOs Directory module to screen CEOs from public companies around the world.
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