Correlation Between International Bancshares and Berkshire Hills
Can any of the company-specific risk be diversified away by investing in both International Bancshares and Berkshire Hills 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 International Bancshares and Berkshire Hills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Bancshares and Berkshire Hills Bancorp, you can compare the effects of market volatilities on International Bancshares and Berkshire Hills 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 International Bancshares with a short position of Berkshire Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Bancshares and Berkshire Hills.
Diversification Opportunities for International Bancshares and Berkshire Hills
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between International and Berkshire is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding International Bancshares and Berkshire Hills Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hills Bancorp and International Bancshares 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 International Bancshares are associated (or correlated) with Berkshire Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hills Bancorp has no effect on the direction of International Bancshares i.e., International Bancshares and Berkshire Hills go up and down completely randomly.
Pair Corralation between International Bancshares and Berkshire Hills
Given the investment horizon of 90 days International Bancshares is expected to generate 1.1 times more return on investment than Berkshire Hills. However, International Bancshares is 1.1 times more volatile than Berkshire Hills Bancorp. It trades about 0.21 of its potential returns per unit of risk. Berkshire Hills Bancorp is currently generating about 0.18 per unit of risk. If you would invest 6,164 in International Bancshares on September 5, 2024 and sell it today you would earn a total of 1,043 from holding International Bancshares or generate 16.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Bancshares vs. Berkshire Hills Bancorp
Performance |
| Timeline |
| International Bancshares |
| Berkshire Hills Bancorp |
International Bancshares and Berkshire Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Bancshares and Berkshire Hills
The main advantage of trading using opposite International Bancshares and Berkshire Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Bancshares position performs unexpectedly, Berkshire Hills 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 Berkshire Hills will offset losses from the drop in Berkshire Hills' long position.The idea behind International Bancshares and Berkshire Hills Bancorp 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.
| Berkshire Hills vs. Finward Bancorp | Berkshire Hills vs. Aquagold International | Berkshire Hills vs. Thrivent High Yield | Berkshire Hills vs. Morningstar Unconstrained Allocation |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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