Correlation Between Eastern Michigan and Solvay Bank
Can any of the company-specific risk be diversified away by investing in both Eastern Michigan and Solvay Bank 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 Solvay Bank 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 Solvay Bank Corp, you can compare the effects of market volatilities on Eastern Michigan and Solvay Bank 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 Solvay Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Michigan and Solvay Bank.
Diversification Opportunities for Eastern Michigan and Solvay Bank
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eastern and Solvay is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Michigan Financial and Solvay Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solvay Bank Corp 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 Solvay Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solvay Bank Corp has no effect on the direction of Eastern Michigan i.e., Eastern Michigan and Solvay Bank go up and down completely randomly.
Pair Corralation between Eastern Michigan and Solvay Bank
Given the investment horizon of 90 days Eastern Michigan Financial is expected to generate 1.24 times more return on investment than Solvay Bank. However, Eastern Michigan is 1.24 times more volatile than Solvay Bank Corp. It trades about 0.09 of its potential returns per unit of risk. Solvay Bank Corp is currently generating about -0.11 per unit of risk. If you would invest 3,450 in Eastern Michigan Financial on August 25, 2024 and sell it today you would earn a total of 91.00 from holding Eastern Michigan Financial or generate 2.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Michigan Financial vs. Solvay Bank Corp
Performance |
| Timeline |
| Eastern Michigan Fin |
| Solvay Bank Corp |
Eastern Michigan and Solvay Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Michigan and Solvay Bank
The main advantage of trading using opposite Eastern Michigan and Solvay Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Michigan position performs unexpectedly, Solvay Bank 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 Solvay Bank will offset losses from the drop in Solvay Bank's long position.| Eastern Michigan vs. Commercial National Financial | Eastern Michigan vs. Mifflinburg Bancorp | Eastern Michigan vs. Apollo Bancorp | Eastern Michigan vs. Community Bankers |
| Solvay Bank vs. Southern Michigan Bancorp | Solvay Bank vs. Summit Bancshares | Solvay Bank vs. Tri County Financial Group | Solvay Bank vs. QNB 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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