Correlation Between Heritage Commerce and American National
Can any of the company-specific risk be diversified away by investing in both Heritage Commerce and American 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 Commerce and American National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heritage Commerce Corp and American National Bankshares, you can compare the effects of market volatilities on Heritage Commerce and American 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 Commerce with a short position of American National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Commerce and American National.
Diversification Opportunities for Heritage Commerce and American National
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Heritage and American is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Commerce Corp and American National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American National and Heritage Commerce 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 Commerce Corp are associated (or correlated) with American National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American National has no effect on the direction of Heritage Commerce i.e., Heritage Commerce and American National go up and down completely randomly.
Pair Corralation between Heritage Commerce and American National
Given the investment horizon of 90 days Heritage Commerce Corp is expected to generate 1.16 times more return on investment than American National. However, Heritage Commerce is 1.16 times more volatile than American National Bankshares. It trades about 0.0 of its potential returns per unit of risk. American National Bankshares is currently generating about -0.04 per unit of risk. If you would invest 1,206 in Heritage Commerce Corp on August 30, 2024 and sell it today you would lose (140.00) from holding Heritage Commerce Corp or give up 11.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 31.25% |
| Values | Daily Returns |
Heritage Commerce Corp vs. American National Bankshares
Performance |
| Timeline |
| Heritage Commerce Corp |
| American National |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Heritage Commerce and American National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heritage Commerce and American National
The main advantage of trading using opposite Heritage Commerce and American National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Commerce position performs unexpectedly, American 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 American National will offset losses from the drop in American National's long position.| Heritage Commerce vs. Home Federal Bancorp | Heritage Commerce vs. First Financial Northwest | Heritage Commerce vs. First Northwest Bancorp | Heritage Commerce vs. First Capital |
| American National vs. First Northwest Bancorp | American National vs. Community West Bancshares | American National vs. First Financial Northwest | American National vs. Great Southern Bancorp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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