Correlation Between Freedom Bank and American Riviera
Can any of the company-specific risk be diversified away by investing in both Freedom Bank and American Riviera 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 American Riviera 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 American Riviera Bank, you can compare the effects of market volatilities on Freedom Bank and American Riviera 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 American Riviera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and American Riviera.
Diversification Opportunities for Freedom Bank and American Riviera
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Freedom and American is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and American Riviera Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Riviera Bank 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 American Riviera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Riviera Bank has no effect on the direction of Freedom Bank i.e., Freedom Bank and American Riviera go up and down completely randomly.
Pair Corralation between Freedom Bank and American Riviera
Given the investment horizon of 90 days Freedom Bank of is expected to under-perform the American Riviera. In addition to that, Freedom Bank is 1.25 times more volatile than American Riviera Bank. It trades about 0.0 of its total potential returns per unit of risk. American Riviera Bank is currently generating about 0.07 per unit of volatility. If you would invest 1,630 in American Riviera Bank on September 12, 2024 and sell it today you would earn a total of 330.00 from holding American Riviera Bank or generate 20.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 75.76% |
| Values | Daily Returns |
Freedom Bank of vs. American Riviera Bank
Performance |
| Timeline |
| Freedom Bank |
| American Riviera Bank |
Freedom Bank and American Riviera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Bank and American Riviera
The main advantage of trading using opposite Freedom Bank and American Riviera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank position performs unexpectedly, American Riviera 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 American Riviera will offset losses from the drop in American Riviera's long position.| Freedom Bank vs. HUMANA INC | Freedom Bank vs. Barloworld Ltd ADR | Freedom Bank vs. Morningstar Unconstrained Allocation | Freedom Bank vs. Thrivent High Yield |
| American Riviera vs. Freedom Bank of | American Riviera vs. HUMANA INC | American Riviera vs. Barloworld Ltd ADR | American Riviera 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 CEOs Directory module to screen CEOs from public companies around the world.
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