Correlation Between Alphabet and Nicolet Bankshares
Can any of the company-specific risk be diversified away by investing in both Alphabet and Nicolet 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 Alphabet and Nicolet Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and Nicolet Bankshares, you can compare the effects of market volatilities on Alphabet and Nicolet 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 Alphabet with a short position of Nicolet Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Nicolet Bankshares.
Diversification Opportunities for Alphabet and Nicolet Bankshares
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alphabet and Nicolet is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Nicolet Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicolet Bankshares and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Nicolet Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicolet Bankshares has no effect on the direction of Alphabet i.e., Alphabet and Nicolet Bankshares go up and down completely randomly.
Pair Corralation between Alphabet and Nicolet Bankshares
Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the Nicolet Bankshares. In addition to that, Alphabet is 2.06 times more volatile than Nicolet Bankshares. It trades about -0.2 of its total potential returns per unit of risk. Nicolet Bankshares is currently generating about 0.26 per unit of volatility. If you would invest 11,071 in Nicolet Bankshares on November 28, 2024 and sell it today you would earn a total of 660.00 from holding Nicolet Bankshares or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Nicolet Bankshares
Performance |
| Timeline |
| Alphabet Class C |
| Nicolet Bankshares |
Alphabet and Nicolet Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Nicolet Bankshares
The main advantage of trading using opposite Alphabet and Nicolet Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Nicolet 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 Nicolet Bankshares will offset losses from the drop in Nicolet Bankshares' long position.The idea behind Alphabet Inc Class C and Nicolet Bankshares pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nicolet Bankshares vs. Old Second Bancorp | Nicolet Bankshares vs. Fidelity DD Bancorp | Nicolet Bankshares vs. BancFirst | Nicolet Bankshares vs. Affinity 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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