Correlation Between Evans Bancorp and Bridgewater Bancshares
Can any of the company-specific risk be diversified away by investing in both Evans Bancorp and Bridgewater Bancshares 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 Bridgewater Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evans Bancorp and Bridgewater Bancshares, you can compare the effects of market volatilities on Evans Bancorp and Bridgewater Bancshares 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 Bridgewater Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evans Bancorp and Bridgewater Bancshares.
Diversification Opportunities for Evans Bancorp and Bridgewater Bancshares
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Evans and Bridgewater is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Evans Bancorp and Bridgewater Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgewater Bancshares 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 Bridgewater Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgewater Bancshares has no effect on the direction of Evans Bancorp i.e., Evans Bancorp and Bridgewater Bancshares go up and down completely randomly.
Pair Corralation between Evans Bancorp and Bridgewater Bancshares
Given the investment horizon of 90 days Evans Bancorp is expected to generate 0.87 times more return on investment than Bridgewater Bancshares. However, Evans Bancorp is 1.15 times less risky than Bridgewater Bancshares. It trades about 0.11 of its potential returns per unit of risk. Bridgewater Bancshares is currently generating about 0.06 per unit of risk. If you would invest 2,758 in Evans Bancorp on September 4, 2024 and sell it today you would earn a total of 1,616 from holding Evans Bancorp or generate 58.59% 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. Bridgewater Bancshares
Performance |
| Timeline |
| Evans Bancorp |
| Bridgewater Bancshares |
Evans Bancorp and Bridgewater Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evans Bancorp and Bridgewater Bancshares
The main advantage of trading using opposite Evans Bancorp and Bridgewater Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evans Bancorp position performs unexpectedly, Bridgewater Bancshares 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 Bridgewater Bancshares will offset losses from the drop in Bridgewater Bancshares' long position.| Evans Bancorp vs. First Community | Evans Bancorp vs. Oak Valley Bancorp | Evans Bancorp vs. First Financial Northwest | Evans Bancorp vs. ESSA Bancorp |
| Bridgewater Bancshares vs. International Bancshares | Bridgewater Bancshares vs. Finward Bancorp | Bridgewater Bancshares vs. Aquagold International | Bridgewater Bancshares vs. Thrivent High Yield |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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