Correlation Between Freedom Bank and Katahdin Bankshares
Can any of the company-specific risk be diversified away by investing in both Freedom Bank and Katahdin Bankshares 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 Katahdin Bankshares 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 Katahdin Bankshares Corp, you can compare the effects of market volatilities on Freedom Bank and Katahdin Bankshares 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 Katahdin Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and Katahdin Bankshares.
Diversification Opportunities for Freedom Bank and Katahdin Bankshares
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Freedom and Katahdin is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Katahdin Bankshares Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Katahdin Bankshares Corp 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 Katahdin Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Katahdin Bankshares Corp has no effect on the direction of Freedom Bank i.e., Freedom Bank and Katahdin Bankshares go up and down completely randomly.
Pair Corralation between Freedom Bank and Katahdin Bankshares
Given the investment horizon of 90 days Freedom Bank of is expected to under-perform the Katahdin Bankshares. But the otc stock apears to be less risky and, when comparing its historical volatility, Freedom Bank of is 1.81 times less risky than Katahdin Bankshares. The otc stock trades about -0.05 of its potential returns per unit of risk. The Katahdin Bankshares Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,240 in Katahdin Bankshares Corp on September 14, 2024 and sell it today you would earn a total of 260.00 from holding Katahdin Bankshares Corp or generate 11.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.32% |
| Values | Daily Returns |
Freedom Bank of vs. Katahdin Bankshares Corp
Performance |
| Timeline |
| Freedom Bank |
| Katahdin Bankshares Corp |
Freedom Bank and Katahdin Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Bank and Katahdin Bankshares
The main advantage of trading using opposite Freedom Bank and Katahdin Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank position performs unexpectedly, Katahdin Bankshares 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 Katahdin Bankshares will offset losses from the drop in Katahdin Bankshares' 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 |
| Katahdin Bankshares vs. Freedom Bank of | Katahdin Bankshares vs. HUMANA INC | Katahdin Bankshares vs. Barloworld Ltd ADR | Katahdin Bankshares 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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