Correlation Between Freedom Bank and Auburn Bancorp
Can any of the company-specific risk be diversified away by investing in both Freedom Bank and Auburn 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 Freedom Bank and Auburn Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Bank of and Auburn Bancorp, you can compare the effects of market volatilities on Freedom Bank and Auburn 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 Freedom Bank with a short position of Auburn Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and Auburn Bancorp.
Diversification Opportunities for Freedom Bank and Auburn Bancorp
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Freedom and Auburn is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Auburn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auburn Bancorp and Freedom Bank 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 Freedom Bank of are associated (or correlated) with Auburn Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auburn Bancorp has no effect on the direction of Freedom Bank i.e., Freedom Bank and Auburn Bancorp go up and down completely randomly.
Pair Corralation between Freedom Bank and Auburn Bancorp
Given the investment horizon of 90 days Freedom Bank is expected to generate 1.1 times less return on investment than Auburn Bancorp. But when comparing it to its historical volatility, Freedom Bank of is 3.23 times less risky than Auburn Bancorp. It trades about 0.12 of its potential returns per unit of risk. Auburn Bancorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 835.00 in Auburn Bancorp on September 14, 2024 and sell it today you would earn a total of 14.00 from holding Auburn Bancorp or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom Bank of vs. Auburn Bancorp
Performance |
| Timeline |
| Freedom Bank |
| Auburn Bancorp |
Freedom Bank and Auburn Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Bank and Auburn Bancorp
The main advantage of trading using opposite Freedom Bank and Auburn Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank position performs unexpectedly, Auburn 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 Auburn Bancorp will offset losses from the drop in Auburn Bancorp's long position.| Freedom Bank vs. National Capital Bank | Freedom Bank vs. Community Heritage Financial | Freedom Bank vs. Citizens Financial Corp | Freedom Bank vs. Bank of Idaho |
| Auburn Bancorp vs. Freedom Bank of | Auburn Bancorp vs. HUMANA INC | Auburn Bancorp vs. Barloworld Ltd ADR | Auburn Bancorp vs. Morningstar Unconstrained Allocation |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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