Correlation Between Investar Holding and Meridian Bank
Can any of the company-specific risk be diversified away by investing in both Investar Holding and Meridian 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 Meridian 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 Meridian Bank, you can compare the effects of market volatilities on Investar Holding and Meridian 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 Meridian Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investar Holding and Meridian Bank.
Diversification Opportunities for Investar Holding and Meridian Bank
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Investar and Meridian is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Investar Holding Corp and Meridian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian 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 Meridian Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Bank has no effect on the direction of Investar Holding i.e., Investar Holding and Meridian Bank go up and down completely randomly.
Pair Corralation between Investar Holding and Meridian Bank
Given the investment horizon of 90 days Investar Holding Corp is expected to under-perform the Meridian Bank. In addition to that, Investar Holding is 1.09 times more volatile than Meridian Bank. It trades about -0.26 of its total potential returns per unit of risk. Meridian Bank is currently generating about 0.49 per unit of volatility. If you would invest 1,396 in Meridian Bank on November 2, 2024 and sell it today you would earn a total of 265.00 from holding Meridian Bank or generate 18.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investar Holding Corp vs. Meridian Bank
Performance |
| Timeline |
| Investar Holding Corp |
| Meridian Bank |
Investar Holding and Meridian Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investar Holding and Meridian Bank
The main advantage of trading using opposite Investar Holding and Meridian Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investar Holding position performs unexpectedly, Meridian 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 Meridian Bank will offset losses from the drop in Meridian 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 |
| Meridian Bank vs. Community West Bancshares | Meridian Bank vs. Investar Holding Corp | Meridian Bank vs. Finward Bancorp | Meridian Bank vs. First Financial Northwest |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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