Correlation Between Evans Bancorp and NSTS Bancorp
Can any of the company-specific risk be diversified away by investing in both Evans Bancorp and NSTS 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 NSTS 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 NSTS Bancorp, you can compare the effects of market volatilities on Evans Bancorp and NSTS 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 NSTS Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evans Bancorp and NSTS Bancorp.
Diversification Opportunities for Evans Bancorp and NSTS Bancorp
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Evans and NSTS is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Evans Bancorp and NSTS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTS 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 NSTS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTS Bancorp has no effect on the direction of Evans Bancorp i.e., Evans Bancorp and NSTS Bancorp go up and down completely randomly.
Pair Corralation between Evans Bancorp and NSTS Bancorp
Given the investment horizon of 90 days Evans Bancorp is expected to generate 3.37 times more return on investment than NSTS Bancorp. However, Evans Bancorp is 3.37 times more volatile than NSTS Bancorp. It trades about 0.24 of its potential returns per unit of risk. NSTS Bancorp is currently generating about 0.07 per unit of risk. If you would invest 3,915 in Evans Bancorp on September 3, 2024 and sell it today you would earn a total of 526.00 from holding Evans Bancorp or generate 13.44% 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. NSTS Bancorp
Performance |
| Timeline |
| Evans Bancorp |
| NSTS Bancorp |
Evans Bancorp and NSTS Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evans Bancorp and NSTS Bancorp
The main advantage of trading using opposite Evans Bancorp and NSTS Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evans Bancorp position performs unexpectedly, NSTS 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 NSTS Bancorp will offset losses from the drop in NSTS Bancorp's long position.| Evans Bancorp vs. JPMorgan Chase Co | Evans Bancorp vs. Citigroup | Evans Bancorp vs. Wells Fargo | Evans Bancorp vs. Toronto Dominion Bank |
| NSTS Bancorp vs. JPMorgan Chase Co | NSTS Bancorp vs. Citigroup | NSTS Bancorp vs. Wells Fargo | NSTS Bancorp vs. Toronto Dominion Bank |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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