Correlation Between Heritage NOLA and Bridgewater Bancshares
Can any of the company-specific risk be diversified away by investing in both Heritage NOLA and Bridgewater Bancshares 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 Bridgewater Bancshares 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 Bridgewater Bancshares Depositary, you can compare the effects of market volatilities on Heritage NOLA and Bridgewater Bancshares 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 Bridgewater Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage NOLA and Bridgewater Bancshares.
Diversification Opportunities for Heritage NOLA and Bridgewater Bancshares
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Heritage and Bridgewater is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Heritage NOLA Bancorp and Bridgewater Bancshares Deposit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgewater Bancshares 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 Bridgewater Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgewater Bancshares has no effect on the direction of Heritage NOLA i.e., Heritage NOLA and Bridgewater Bancshares go up and down completely randomly.
Pair Corralation between Heritage NOLA and Bridgewater Bancshares
Given the investment horizon of 90 days Heritage NOLA Bancorp is expected to under-perform the Bridgewater Bancshares. In addition to that, Heritage NOLA is 1.19 times more volatile than Bridgewater Bancshares Depositary. It trades about -0.04 of its total potential returns per unit of risk. Bridgewater Bancshares Depositary is currently generating about 0.11 per unit of volatility. If you would invest 1,899 in Bridgewater Bancshares Depositary on November 28, 2024 and sell it today you would earn a total of 38.00 from holding Bridgewater Bancshares Depositary or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heritage NOLA Bancorp vs. Bridgewater Bancshares Deposit
Performance |
| Timeline |
| Heritage NOLA Bancorp |
| Bridgewater Bancshares |
Heritage NOLA and Bridgewater Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heritage NOLA and Bridgewater Bancshares
The main advantage of trading using opposite Heritage NOLA and Bridgewater Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage NOLA position performs unexpectedly, Bridgewater Bancshares 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 Bridgewater Bancshares will offset losses from the drop in Bridgewater Bancshares' long position.| Heritage NOLA vs. Rhinebeck Bancorp | Heritage NOLA vs. Bridgewater Bancshares Depositary | Heritage NOLA vs. Home Federal Bancorp | Heritage NOLA vs. LINKBANCORP |
| Bridgewater Bancshares vs. CNB Financial | Bridgewater Bancshares vs. First Guaranty Bancshares | Bridgewater Bancshares vs. Dime Community Bancshares | Bridgewater Bancshares vs. Brighthouse Financial |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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