Correlation Between Evans Bancorp and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Evans Bancorp and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evans Bancorp and Dow Jones Industrial, you can compare the effects of market volatilities on Evans Bancorp and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evans Bancorp and Dow Jones.
Diversification Opportunities for Evans Bancorp and Dow Jones
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Evans and Dow is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Evans Bancorp and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Evans Bancorp i.e., Evans Bancorp and Dow Jones go up and down completely randomly.
Pair Corralation between Evans Bancorp and Dow Jones
Given the investment horizon of 90 days Evans Bancorp is expected to generate 2.78 times more return on investment than Dow Jones. However, Evans Bancorp is 2.78 times more volatile than Dow Jones Industrial. It trades about 0.21 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evans Bancorp vs. Dow Jones Industrial
Performance |
| Timeline |
Evans Bancorp and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Evans Bancorp
Pair trading matchups for Evans Bancorp
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Evans Bancorp and Dow Jones
The main advantage of trading using opposite Evans Bancorp and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evans Bancorp position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Evans Bancorp vs. Fifth Third Bancorp | Evans Bancorp vs. Huntington Bancshares Incorporated | Evans Bancorp vs. Comerica | Evans Bancorp vs. MT Bank |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |