Correlation Between Investar Holding and Mainstreet Bank
Can any of the company-specific risk be diversified away by investing in both Investar Holding and Mainstreet Bank 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 Investar Holding and Mainstreet Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investar Holding Corp and Mainstreet Bank, you can compare the effects of market volatilities on Investar Holding and Mainstreet Bank 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 Investar Holding with a short position of Mainstreet Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investar Holding and Mainstreet Bank.
Diversification Opportunities for Investar Holding and Mainstreet Bank
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Investar and Mainstreet is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Investar Holding Corp and Mainstreet Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstreet Bank and Investar Holding 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 Investar Holding Corp are associated (or correlated) with Mainstreet Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstreet Bank has no effect on the direction of Investar Holding i.e., Investar Holding and Mainstreet Bank go up and down completely randomly.
Pair Corralation between Investar Holding and Mainstreet Bank
Given the investment horizon of 90 days Investar Holding Corp is expected to under-perform the Mainstreet Bank. In addition to that, Investar Holding is 1.25 times more volatile than Mainstreet Bank. It trades about -0.25 of its total potential returns per unit of risk. Mainstreet Bank is currently generating about -0.18 per unit of volatility. If you would invest 1,766 in Mainstreet Bank on November 3, 2024 and sell it today you would lose (105.00) from holding Mainstreet Bank or give up 5.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investar Holding Corp vs. Mainstreet Bank
Performance |
| Timeline |
| Investar Holding Corp |
| Mainstreet Bank |
Investar Holding and Mainstreet Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investar Holding and Mainstreet Bank
The main advantage of trading using opposite Investar Holding and Mainstreet Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investar Holding position performs unexpectedly, Mainstreet Bank 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 Mainstreet Bank will offset losses from the drop in Mainstreet Bank's long position.| Investar Holding vs. Magyar Bancorp | Investar Holding vs. Home Federal Bancorp | Investar Holding vs. Community West Bancshares | Investar Holding vs. First Northwest Bancorp |
| Mainstreet Bank vs. Oak Valley Bancorp | Mainstreet Bank vs. Home Federal Bancorp | Mainstreet Bank vs. LINKBANCORP | Mainstreet Bank vs. First Northwest 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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