Correlation Between Exchange Bankshares and Summit Bank
Can any of the company-specific risk be diversified away by investing in both Exchange Bankshares and Summit 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 Exchange Bankshares and Summit Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exchange Bankshares and Summit Bank Group, you can compare the effects of market volatilities on Exchange Bankshares and Summit 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 Exchange Bankshares with a short position of Summit Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Bankshares and Summit Bank.
Diversification Opportunities for Exchange Bankshares and Summit Bank
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exchange and Summit is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Bankshares and Summit Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Bank Group and Exchange Bankshares 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 Exchange Bankshares are associated (or correlated) with Summit Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Bank Group has no effect on the direction of Exchange Bankshares i.e., Exchange Bankshares and Summit Bank go up and down completely randomly.
Pair Corralation between Exchange Bankshares and Summit Bank
Given the investment horizon of 90 days Exchange Bankshares is expected to generate 0.18 times more return on investment than Summit Bank. However, Exchange Bankshares is 5.67 times less risky than Summit Bank. It trades about 0.3 of its potential returns per unit of risk. Summit Bank Group is currently generating about 0.05 per unit of risk. If you would invest 4,501 in Exchange Bankshares on October 9, 2024 and sell it today you would earn a total of 289.00 from holding Exchange Bankshares or generate 6.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exchange Bankshares vs. Summit Bank Group
Performance |
| Timeline |
| Exchange Bankshares |
| Summit Bank Group |
Exchange Bankshares and Summit Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exchange Bankshares and Summit Bank
The main advantage of trading using opposite Exchange Bankshares and Summit Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exchange Bankshares position performs unexpectedly, Summit 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 Summit Bank will offset losses from the drop in Summit Bank's long position.| Exchange Bankshares vs. First Community Financial | Exchange Bankshares vs. National Capital Bank | Exchange Bankshares vs. Oakworth Capital | Exchange Bankshares vs. Truxton |
| Summit Bank vs. Savi Financial | Summit Bank vs. Pacific West Bancorp | Summit Bank vs. Commencement Bancorp | Summit Bank vs. Merchants Marine 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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