Correlation Between Employers Holdings and Customers Bancorp
Can any of the company-specific risk be diversified away by investing in both Employers Holdings and Customers 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 Employers Holdings and Customers Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Employers Holdings and Customers Bancorp, you can compare the effects of market volatilities on Employers Holdings and Customers 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 Employers Holdings with a short position of Customers Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Employers Holdings and Customers Bancorp.
Diversification Opportunities for Employers Holdings and Customers Bancorp
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Employers and Customers is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and Customers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Customers Bancorp and Employers Holdings 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 Employers Holdings are associated (or correlated) with Customers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Customers Bancorp has no effect on the direction of Employers Holdings i.e., Employers Holdings and Customers Bancorp go up and down completely randomly.
Pair Corralation between Employers Holdings and Customers Bancorp
Considering the 90-day investment horizon Employers Holdings is expected to generate 2.06 times less return on investment than Customers Bancorp. But when comparing it to its historical volatility, Employers Holdings is 2.17 times less risky than Customers Bancorp. It trades about 0.21 of its potential returns per unit of risk. Customers Bancorp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,560 in Customers Bancorp on August 24, 2024 and sell it today you would earn a total of 968.00 from holding Customers Bancorp or generate 21.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Employers Holdings vs. Customers Bancorp
Performance |
| Timeline |
| Employers Holdings |
| Customers Bancorp |
Employers Holdings and Customers Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Employers Holdings and Customers Bancorp
The main advantage of trading using opposite Employers Holdings and Customers Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings position performs unexpectedly, Customers 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 Customers Bancorp will offset losses from the drop in Customers Bancorp's long position.| Employers Holdings vs. ICC Holdings | Employers Holdings vs. AMERISAFE | Employers Holdings vs. NMI Holdings | Employers Holdings vs. Investors Title |
| Customers Bancorp vs. Glacier Bancorp | Customers Bancorp vs. Capitol Federal Financial | Customers Bancorp vs. Byline Bancorp | Customers Bancorp vs. Cathay General Bancorp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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