Correlation Between Eastern Michigan and Bank of Botetourt
Can any of the company-specific risk be diversified away by investing in both Eastern Michigan and Bank of Botetourt 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 Eastern Michigan and Bank of Botetourt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Michigan Financial and Bank of Botetourt, you can compare the effects of market volatilities on Eastern Michigan and Bank of Botetourt 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 Eastern Michigan with a short position of Bank of Botetourt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Michigan and Bank of Botetourt.
Diversification Opportunities for Eastern Michigan and Bank of Botetourt
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eastern and Bank is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Michigan Financial and Bank of Botetourt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Botetourt and Eastern Michigan 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 Eastern Michigan Financial are associated (or correlated) with Bank of Botetourt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Botetourt has no effect on the direction of Eastern Michigan i.e., Eastern Michigan and Bank of Botetourt go up and down completely randomly.
Pair Corralation between Eastern Michigan and Bank of Botetourt
Given the investment horizon of 90 days Eastern Michigan Financial is expected to generate 1.02 times more return on investment than Bank of Botetourt. However, Eastern Michigan is 1.02 times more volatile than Bank of Botetourt. It trades about 0.3 of its potential returns per unit of risk. Bank of Botetourt is currently generating about 0.0 per unit of risk. If you would invest 3,550 in Eastern Michigan Financial on November 2, 2024 and sell it today you would earn a total of 334.00 from holding Eastern Michigan Financial or generate 9.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Michigan Financial vs. Bank of Botetourt
Performance |
| Timeline |
| Eastern Michigan Fin |
| Bank of Botetourt |
Eastern Michigan and Bank of Botetourt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Michigan and Bank of Botetourt
The main advantage of trading using opposite Eastern Michigan and Bank of Botetourt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Michigan position performs unexpectedly, Bank of Botetourt 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 Bank of Botetourt will offset losses from the drop in Bank of Botetourt's long position.| Eastern Michigan vs. Commercial National Financial | Eastern Michigan vs. Mifflinburg Bancorp | Eastern Michigan vs. Apollo Bancorp | Eastern Michigan vs. Community Bankers |
| Bank of Botetourt vs. Century Financial Corp | Bank of Botetourt vs. FS Bancorp | Bank of Botetourt vs. Lyons Bancorp | Bank of Botetourt vs. Solvay Bank 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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