Correlation Between Heritage NOLA and Ames National
Can any of the company-specific risk be diversified away by investing in both Heritage NOLA and Ames National 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 Heritage NOLA and Ames National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heritage NOLA Bancorp and Ames National, you can compare the effects of market volatilities on Heritage NOLA and Ames National 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 Heritage NOLA with a short position of Ames National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage NOLA and Ames National.
Diversification Opportunities for Heritage NOLA and Ames National
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Heritage and Ames is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Heritage NOLA Bancorp and Ames National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ames National and Heritage NOLA 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 Heritage NOLA Bancorp are associated (or correlated) with Ames National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ames National has no effect on the direction of Heritage NOLA i.e., Heritage NOLA and Ames National go up and down completely randomly.
Pair Corralation between Heritage NOLA and Ames National
Given the investment horizon of 90 days Heritage NOLA Bancorp is expected to under-perform the Ames National. In addition to that, Heritage NOLA is 1.09 times more volatile than Ames National. It trades about -0.04 of its total potential returns per unit of risk. Ames National is currently generating about 0.15 per unit of volatility. If you would invest 1,780 in Ames National on November 28, 2024 and sell it today you would earn a total of 52.00 from holding Ames National or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heritage NOLA Bancorp vs. Ames National
Performance |
| Timeline |
| Heritage NOLA Bancorp |
| Ames National |
Heritage NOLA and Ames National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heritage NOLA and Ames National
The main advantage of trading using opposite Heritage NOLA and Ames National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage NOLA position performs unexpectedly, Ames National 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 Ames National will offset losses from the drop in Ames National's long position.| Heritage NOLA vs. Rhinebeck Bancorp | Heritage NOLA vs. Bridgewater Bancshares Depositary | Heritage NOLA vs. Home Federal Bancorp | Heritage NOLA vs. LINKBANCORP |
| Ames National vs. First Community | Ames National vs. Old Point Financial | Ames National vs. Oak Valley Bancorp | Ames National vs. Chemung Financial Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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