Correlation Between ECB Bancorp and Ames National
Can any of the company-specific risk be diversified away by investing in both ECB Bancorp and Ames National 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 ECB Bancorp and Ames National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECB Bancorp and Ames National, you can compare the effects of market volatilities on ECB Bancorp and Ames National 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 ECB Bancorp with a short position of Ames National. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECB Bancorp and Ames National.
Diversification Opportunities for ECB Bancorp and Ames National
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ECB and Ames is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ECB Bancorp and Ames National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ames National and ECB Bancorp 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 ECB Bancorp are associated (or correlated) with Ames National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ames National has no effect on the direction of ECB Bancorp i.e., ECB Bancorp and Ames National go up and down completely randomly.
Pair Corralation between ECB Bancorp and Ames National
Given the investment horizon of 90 days ECB Bancorp is expected to under-perform the Ames National. In addition to that, ECB Bancorp is 2.23 times more volatile than Ames National. It trades about -0.03 of its total potential returns per unit of risk. Ames National is currently generating about 0.32 per unit of volatility. If you would invest 1,723 in Ames National on November 18, 2024 and sell it today you would earn a total of 116.00 from holding Ames National or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECB Bancorp vs. Ames National
Performance |
| Timeline |
| ECB Bancorp |
| Ames National |
ECB Bancorp and Ames National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECB Bancorp and Ames National
The main advantage of trading using opposite ECB Bancorp and Ames National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECB Bancorp position performs unexpectedly, Ames National 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 Ames National will offset losses from the drop in Ames National's long position.| ECB Bancorp vs. Home Federal Bancorp | ECB Bancorp vs. Lake Shore Bancorp | ECB Bancorp vs. Old Point Financial | ECB Bancorp vs. Parke Bancorp |
| Ames National vs. First Community | Ames National vs. Old Point Financial | Ames National vs. Oak Valley Bancorp | Ames National vs. Chemung 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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