Correlation Between Evans Bancorp and Amerant Bancorp
Can any of the company-specific risk be diversified away by investing in both Evans Bancorp and Amerant 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 Evans Bancorp and Amerant Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evans Bancorp and Amerant Bancorp, you can compare the effects of market volatilities on Evans Bancorp and Amerant 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 Evans Bancorp with a short position of Amerant Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evans Bancorp and Amerant Bancorp.
Diversification Opportunities for Evans Bancorp and Amerant Bancorp
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Evans and Amerant is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Evans Bancorp and Amerant Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amerant Bancorp and Evans 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 Evans Bancorp are associated (or correlated) with Amerant Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amerant Bancorp has no effect on the direction of Evans Bancorp i.e., Evans Bancorp and Amerant Bancorp go up and down completely randomly.
Pair Corralation between Evans Bancorp and Amerant Bancorp
Given the investment horizon of 90 days Evans Bancorp is expected to generate 1.29 times less return on investment than Amerant Bancorp. But when comparing it to its historical volatility, Evans Bancorp is 1.18 times less risky than Amerant Bancorp. It trades about 0.18 of its potential returns per unit of risk. Amerant Bancorp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,192 in Amerant Bancorp on August 29, 2024 and sell it today you would earn a total of 313.00 from holding Amerant Bancorp or generate 14.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evans Bancorp vs. Amerant Bancorp
Performance |
| Timeline |
| Evans Bancorp |
| Amerant Bancorp |
Evans Bancorp and Amerant Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evans Bancorp and Amerant Bancorp
The main advantage of trading using opposite Evans Bancorp and Amerant Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evans Bancorp position performs unexpectedly, Amerant 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 Amerant Bancorp will offset losses from the drop in Amerant Bancorp's long position.The idea behind Evans Bancorp and Amerant Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Amerant Bancorp vs. Affinity Bancshares | Amerant Bancorp vs. Southern California Bancorp | Amerant Bancorp vs. Auburn National Bancorporation | Amerant Bancorp vs. BayCom 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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