Correlation Between Evans Bancorp and BFC Capital
Can any of the company-specific risk be diversified away by investing in both Evans Bancorp and BFC Capital 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 BFC Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evans Bancorp and BFC Capital Trust, you can compare the effects of market volatilities on Evans Bancorp and BFC Capital 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 BFC Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evans Bancorp and BFC Capital.
Diversification Opportunities for Evans Bancorp and BFC Capital
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Evans and BFC is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Evans Bancorp and BFC Capital Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BFC Capital Trust 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 BFC Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BFC Capital Trust has no effect on the direction of Evans Bancorp i.e., Evans Bancorp and BFC Capital go up and down completely randomly.
Pair Corralation between Evans Bancorp and BFC Capital
Given the investment horizon of 90 days Evans Bancorp is expected to generate 4.93 times more return on investment than BFC Capital. However, Evans Bancorp is 4.93 times more volatile than BFC Capital Trust. It trades about 0.21 of its potential returns per unit of risk. BFC Capital Trust is currently generating about -0.02 per unit of risk. If you would invest 4,003 in Evans Bancorp on August 28, 2024 and sell it today you would earn a total of 489.00 from holding Evans Bancorp or generate 12.22% 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. BFC Capital Trust
Performance |
| Timeline |
| Evans Bancorp |
| BFC Capital Trust |
Evans Bancorp and BFC Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evans Bancorp and BFC Capital
The main advantage of trading using opposite Evans Bancorp and BFC Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evans Bancorp position performs unexpectedly, BFC Capital 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 BFC Capital will offset losses from the drop in BFC Capital's long position.| Evans Bancorp vs. First Community | Evans Bancorp vs. Oak Valley Bancorp | Evans Bancorp vs. First Financial Northwest | Evans Bancorp vs. ESSA Bancorp |
| BFC Capital vs. Popular Capital Trust | BFC Capital vs. CHS Inc CN | BFC Capital vs. Wintrust Financial Corp | BFC Capital vs. Auburn National Bancorporation |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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