Correlation Between ECB Bancorp and Banc Of
Can any of the company-specific risk be diversified away by investing in both ECB Bancorp and Banc Of 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 Banc Of into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECB Bancorp and Banc of California, you can compare the effects of market volatilities on ECB Bancorp and Banc Of 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 Banc Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECB Bancorp and Banc Of.
Diversification Opportunities for ECB Bancorp and Banc Of
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ECB and Banc is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding ECB Bancorp and Banc of California in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banc of California 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 Banc Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banc of California has no effect on the direction of ECB Bancorp i.e., ECB Bancorp and Banc Of go up and down completely randomly.
Pair Corralation between ECB Bancorp and Banc Of
Given the investment horizon of 90 days ECB Bancorp is expected to under-perform the Banc Of. In addition to that, ECB Bancorp is 6.12 times more volatile than Banc of California. It trades about -0.12 of its total potential returns per unit of risk. Banc of California is currently generating about 0.35 per unit of volatility. If you would invest 2,453 in Banc of California on November 2, 2024 and sell it today you would earn a total of 94.00 from holding Banc of California or generate 3.83% 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. Banc of California
Performance |
| Timeline |
| ECB Bancorp |
| Banc of California |
ECB Bancorp and Banc Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECB Bancorp and Banc Of
The main advantage of trading using opposite ECB Bancorp and Banc Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECB Bancorp position performs unexpectedly, Banc Of 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 Banc Of will offset losses from the drop in Banc Of's long position.| ECB Bancorp vs. Home Federal Bancorp | ECB Bancorp vs. Magyar Bancorp | ECB Bancorp vs. First Capital | ECB Bancorp vs. HomeTrust Bancshares |
| Banc Of vs. Ameriprise Financial | Banc Of vs. Arrow Electronics | Banc Of vs. Cedar Realty Trust | Banc Of vs. Sonos Inc |
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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