Correlation Between Codorus Valley and Merchants Bancorp
Can any of the company-specific risk be diversified away by investing in both Codorus Valley and Merchants Bancorp 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 Codorus Valley and Merchants Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Codorus Valley Bancorp and Merchants Bancorp, you can compare the effects of market volatilities on Codorus Valley and Merchants Bancorp 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 Codorus Valley with a short position of Merchants Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Codorus Valley and Merchants Bancorp.
Diversification Opportunities for Codorus Valley and Merchants Bancorp
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Codorus and Merchants is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Codorus Valley Bancorp and Merchants Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants Bancorp and Codorus Valley 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 Codorus Valley Bancorp are associated (or correlated) with Merchants Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants Bancorp has no effect on the direction of Codorus Valley i.e., Codorus Valley and Merchants Bancorp go up and down completely randomly.
Pair Corralation between Codorus Valley and Merchants Bancorp
Given the investment horizon of 90 days Codorus Valley Bancorp is expected to generate 0.4 times more return on investment than Merchants Bancorp. However, Codorus Valley Bancorp is 2.52 times less risky than Merchants Bancorp. It trades about 0.15 of its potential returns per unit of risk. Merchants Bancorp is currently generating about 0.02 per unit of risk. If you would invest 2,175 in Codorus Valley Bancorp on September 3, 2024 and sell it today you would earn a total of 229.00 from holding Codorus Valley Bancorp or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 35.54% |
| Values | Daily Returns |
Codorus Valley Bancorp vs. Merchants Bancorp
Performance |
| Timeline |
| Codorus Valley Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Merchants Bancorp |
Codorus Valley and Merchants Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Codorus Valley and Merchants Bancorp
The main advantage of trading using opposite Codorus Valley and Merchants Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Codorus Valley position performs unexpectedly, Merchants Bancorp 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 Merchants Bancorp will offset losses from the drop in Merchants Bancorp's long position.| Codorus Valley vs. Home Federal Bancorp | Codorus Valley vs. First Financial Northwest | Codorus Valley vs. First Northwest Bancorp | Codorus Valley vs. First Capital |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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