Correlation Between International Bancshares and Red River
Can any of the company-specific risk be diversified away by investing in both International Bancshares and Red River 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 Red River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Bancshares and Red River Bancshares, you can compare the effects of market volatilities on International Bancshares and Red River 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 Red River. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Bancshares and Red River.
Diversification Opportunities for International Bancshares and Red River
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between International and Red is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding International Bancshares and Red River Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red River Bancshares 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 Red River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red River Bancshares has no effect on the direction of International Bancshares i.e., International Bancshares and Red River go up and down completely randomly.
Pair Corralation between International Bancshares and Red River
Given the investment horizon of 90 days International Bancshares is expected to generate 1.98 times more return on investment than Red River. However, International Bancshares is 1.98 times more volatile than Red River Bancshares. It trades about 0.25 of its potential returns per unit of risk. Red River Bancshares is currently generating about 0.37 per unit of risk. If you would invest 6,126 in International Bancshares on September 1, 2024 and sell it today you would earn a total of 1,187 from holding International Bancshares or generate 19.38% 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. Red River Bancshares
Performance |
| Timeline |
| International Bancshares |
| Red River Bancshares |
International Bancshares and Red River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Bancshares and Red River
The main advantage of trading using opposite International Bancshares and Red River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Bancshares position performs unexpectedly, Red River 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 Red River will offset losses from the drop in Red River's long position.| International Bancshares vs. Home Federal Bancorp | International Bancshares vs. First Financial Northwest | International Bancshares vs. First Northwest Bancorp | International Bancshares vs. First Capital |
| Red River vs. Home Federal Bancorp | Red River vs. Magyar Bancorp | Red River vs. Community West Bancshares | Red River vs. Rhinebeck 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |