Correlation Between Heritage Commerce and LINKBANCORP
Can any of the company-specific risk be diversified away by investing in both Heritage Commerce and LINKBANCORP 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 LINKBANCORP 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 LINKBANCORP, you can compare the effects of market volatilities on Heritage Commerce and LINKBANCORP 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 LINKBANCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Commerce and LINKBANCORP.
Diversification Opportunities for Heritage Commerce and LINKBANCORP
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Heritage and LINKBANCORP is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Commerce Corp and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP 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 LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of Heritage Commerce i.e., Heritage Commerce and LINKBANCORP go up and down completely randomly.
Pair Corralation between Heritage Commerce and LINKBANCORP
Given the investment horizon of 90 days Heritage Commerce Corp is expected to under-perform the LINKBANCORP. In addition to that, Heritage Commerce is 1.03 times more volatile than LINKBANCORP. It trades about -0.01 of its total potential returns per unit of risk. LINKBANCORP is currently generating about 0.09 per unit of volatility. If you would invest 608.00 in LINKBANCORP on November 2, 2024 and sell it today you would earn a total of 104.00 from holding LINKBANCORP or generate 17.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heritage Commerce Corp vs. LINKBANCORP
Performance |
| Timeline |
| Heritage Commerce Corp |
| LINKBANCORP |
Heritage Commerce and LINKBANCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heritage Commerce and LINKBANCORP
The main advantage of trading using opposite Heritage Commerce and LINKBANCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Commerce position performs unexpectedly, LINKBANCORP 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 LINKBANCORP will offset losses from the drop in LINKBANCORP'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 |
| LINKBANCORP vs. Home Federal Bancorp | LINKBANCORP vs. Lake Shore Bancorp | LINKBANCORP vs. Community West Bancshares | LINKBANCORP vs. Magyar 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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