Correlation Between Evans Bancorp and National Bank
Can any of the company-specific risk be diversified away by investing in both Evans Bancorp and National Bank 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 National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evans Bancorp and National Bank Holdings, you can compare the effects of market volatilities on Evans Bancorp and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evans Bancorp and National Bank.
Diversification Opportunities for Evans Bancorp and National Bank
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Evans and National is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Evans Bancorp and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of Evans Bancorp i.e., Evans Bancorp and National Bank go up and down completely randomly.
Pair Corralation between Evans Bancorp and National Bank
Given the investment horizon of 90 days Evans Bancorp is expected to generate 0.78 times more return on investment than National Bank. However, Evans Bancorp is 1.28 times less risky than National Bank. It trades about 0.04 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.03 per unit of risk. If you would invest 3,482 in Evans Bancorp on August 30, 2024 and sell it today you would earn a total of 976.00 from holding Evans Bancorp or generate 28.03% 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. National Bank Holdings
Performance |
| Timeline |
| Evans Bancorp |
| National Bank Holdings |
Evans Bancorp and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evans Bancorp and National Bank
The main advantage of trading using opposite Evans Bancorp and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evans Bancorp position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank'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 |
| National Bank vs. First Community | National Bank vs. Community West Bancshares | National Bank vs. First Financial Northwest | National Bank vs. First Northwest Bancorp |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |