Correlation Between German American and ChoiceOne Financial
Can any of the company-specific risk be diversified away by investing in both German American and ChoiceOne 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 German American and ChoiceOne Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between German American Bancorp and ChoiceOne Financial Services, you can compare the effects of market volatilities on German American and ChoiceOne 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 German American with a short position of ChoiceOne Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of German American and ChoiceOne Financial.
Diversification Opportunities for German American and ChoiceOne Financial
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between German and ChoiceOne is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding German American Bancorp and ChoiceOne Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChoiceOne Financial and German American 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 German American Bancorp are associated (or correlated) with ChoiceOne Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChoiceOne Financial has no effect on the direction of German American i.e., German American and ChoiceOne Financial go up and down completely randomly.
Pair Corralation between German American and ChoiceOne Financial
Given the investment horizon of 90 days German American is expected to generate 1.26 times less return on investment than ChoiceOne Financial. But when comparing it to its historical volatility, German American Bancorp is 1.64 times less risky than ChoiceOne Financial. It trades about 0.08 of its potential returns per unit of risk. ChoiceOne Financial Services is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,258 in ChoiceOne Financial Services on September 2, 2024 and sell it today you would earn a total of 1,490 from holding ChoiceOne Financial Services or generate 65.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
German American Bancorp vs. ChoiceOne Financial Services
Performance |
| Timeline |
| German American Bancorp |
| ChoiceOne Financial |
German American and ChoiceOne Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with German American and ChoiceOne Financial
The main advantage of trading using opposite German American and ChoiceOne Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if German American position performs unexpectedly, ChoiceOne 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 ChoiceOne Financial will offset losses from the drop in ChoiceOne Financial's long position.| German American vs. Lakeland Financial | German American vs. Great Southern Bancorp | German American vs. First Merchants | German American vs. First Financial |
| ChoiceOne Financial vs. Affinity Bancshares | ChoiceOne Financial vs. Auburn National Bancorporation | ChoiceOne Financial vs. BayCom Corp | ChoiceOne Financial vs. Community West Bancshares |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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