Correlation Between Grand River and Sturgis Bancorp
Can any of the company-specific risk be diversified away by investing in both Grand River and Sturgis 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 Grand River and Sturgis Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand River Commerce and Sturgis Bancorp, you can compare the effects of market volatilities on Grand River and Sturgis 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 Grand River with a short position of Sturgis Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand River and Sturgis Bancorp.
Diversification Opportunities for Grand River and Sturgis Bancorp
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grand and Sturgis is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Grand River Commerce and Sturgis Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sturgis Bancorp and Grand River 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 Grand River Commerce are associated (or correlated) with Sturgis Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sturgis Bancorp has no effect on the direction of Grand River i.e., Grand River and Sturgis Bancorp go up and down completely randomly.
Pair Corralation between Grand River and Sturgis Bancorp
Given the investment horizon of 90 days Grand River Commerce is expected to generate 1.18 times more return on investment than Sturgis Bancorp. However, Grand River is 1.18 times more volatile than Sturgis Bancorp. It trades about -0.03 of its potential returns per unit of risk. Sturgis Bancorp is currently generating about -0.04 per unit of risk. If you would invest 558.00 in Grand River Commerce on November 2, 2024 and sell it today you would lose (192.00) from holding Grand River Commerce or give up 34.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 22.67% |
| Values | Daily Returns |
Grand River Commerce vs. Sturgis Bancorp
Performance |
| Timeline |
| Grand River Commerce |
| Sturgis Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Grand River and Sturgis Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand River and Sturgis Bancorp
The main advantage of trading using opposite Grand River and Sturgis Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand River position performs unexpectedly, Sturgis 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 Sturgis Bancorp will offset losses from the drop in Sturgis Bancorp's long position.| Grand River vs. FS Bancorp | Grand River vs. Eastern Michigan Financial | Grand River vs. Bank of Botetourt | Grand River vs. FNB Inc |
| Sturgis Bancorp vs. FS Bancorp | Sturgis Bancorp vs. Eastern Michigan Financial | Sturgis Bancorp vs. Grand River Commerce | Sturgis Bancorp vs. Bank of Botetourt |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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