Correlation Between Evans Bancorp and Tectonic Financial
Can any of the company-specific risk be diversified away by investing in both Evans Bancorp and Tectonic Financial 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 Tectonic Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evans Bancorp and Tectonic Financial PR, you can compare the effects of market volatilities on Evans Bancorp and Tectonic Financial 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 Tectonic Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evans Bancorp and Tectonic Financial.
Diversification Opportunities for Evans Bancorp and Tectonic Financial
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Evans and Tectonic is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Evans Bancorp and Tectonic Financial PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectonic Financial 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 Tectonic Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectonic Financial has no effect on the direction of Evans Bancorp i.e., Evans Bancorp and Tectonic Financial go up and down completely randomly.
Pair Corralation between Evans Bancorp and Tectonic Financial
Given the investment horizon of 90 days Evans Bancorp is expected to generate 1.5 times more return on investment than Tectonic Financial. However, Evans Bancorp is 1.5 times more volatile than Tectonic Financial PR. It trades about 0.05 of its potential returns per unit of risk. Tectonic Financial PR is currently generating about 0.04 per unit of risk. If you would invest 4,325 in Evans Bancorp on November 18, 2024 and sell it today you would earn a total of 59.00 from holding Evans Bancorp or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evans Bancorp vs. Tectonic Financial PR
Performance |
| Timeline |
| Evans Bancorp |
| Tectonic Financial |
Evans Bancorp and Tectonic Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evans Bancorp and Tectonic Financial
The main advantage of trading using opposite Evans Bancorp and Tectonic Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evans Bancorp position performs unexpectedly, Tectonic Financial 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 Tectonic Financial will offset losses from the drop in Tectonic Financial'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 |
| Tectonic Financial vs. First Guaranty Bancshares | Tectonic Financial vs. First Merchants | Tectonic Financial vs. Associated Banc Corp | Tectonic Financial vs. Bridgewater Bancshares Depositary |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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