Correlation Between Equity Bancshares, and Heritage Financial
Can any of the company-specific risk be diversified away by investing in both Equity Bancshares, and Heritage Financial 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 Equity Bancshares, and Heritage Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Bancshares, and Heritage Financial, you can compare the effects of market volatilities on Equity Bancshares, and Heritage Financial 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 Equity Bancshares, with a short position of Heritage Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Bancshares, and Heritage Financial.
Diversification Opportunities for Equity Bancshares, and Heritage Financial
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Equity and Heritage is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Equity Bancshares, and Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Financial and Equity Bancshares, 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 Equity Bancshares, are associated (or correlated) with Heritage Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Financial has no effect on the direction of Equity Bancshares, i.e., Equity Bancshares, and Heritage Financial go up and down completely randomly.
Pair Corralation between Equity Bancshares, and Heritage Financial
Given the investment horizon of 90 days Equity Bancshares, is expected to generate 1.73 times less return on investment than Heritage Financial. But when comparing it to its historical volatility, Equity Bancshares, is 1.33 times less risky than Heritage Financial. It trades about 0.18 of its potential returns per unit of risk. Heritage Financial is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,166 in Heritage Financial on August 24, 2024 and sell it today you would earn a total of 413.00 from holding Heritage Financial or generate 19.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Bancshares, vs. Heritage Financial
Performance |
| Timeline |
| Equity Bancshares, |
| Heritage Financial |
Equity Bancshares, and Heritage Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Bancshares, and Heritage Financial
The main advantage of trading using opposite Equity Bancshares, and Heritage Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Bancshares, position performs unexpectedly, Heritage Financial 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 Heritage Financial will offset losses from the drop in Heritage Financial's long position.| Equity Bancshares, vs. Banco Bradesco SA | Equity Bancshares, vs. Itau Unibanco Banco | Equity Bancshares, vs. Banco Santander Brasil | Equity Bancshares, vs. Western Alliance Bancorporation |
| Heritage Financial vs. Heritage Commerce Corp | Heritage Financial vs. Horizon Bancorp | Heritage Financial vs. Heartland Financial USA | Heritage Financial vs. Independent Bank |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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