Correlation Between Investar Holding and Northeast Bancorp
Can any of the company-specific risk be diversified away by investing in both Investar Holding and Northeast Bancorp 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 Northeast Bancorp 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 Northeast Bancorp, you can compare the effects of market volatilities on Investar Holding and Northeast Bancorp 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 Northeast Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investar Holding and Northeast Bancorp.
Diversification Opportunities for Investar Holding and Northeast Bancorp
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Investar and Northeast is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Investar Holding Corp and Northeast Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast Bancorp 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 Northeast Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Bancorp has no effect on the direction of Investar Holding i.e., Investar Holding and Northeast Bancorp go up and down completely randomly.
Pair Corralation between Investar Holding and Northeast Bancorp
Given the investment horizon of 90 days Investar Holding Corp is expected to under-perform the Northeast Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Investar Holding Corp is 1.29 times less risky than Northeast Bancorp. The stock trades about -0.13 of its potential returns per unit of risk. The Northeast Bancorp is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 10,195 in Northeast Bancorp on November 27, 2024 and sell it today you would lose (267.00) from holding Northeast Bancorp or give up 2.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investar Holding Corp vs. Northeast Bancorp
Performance |
| Timeline |
| Investar Holding Corp |
| Northeast Bancorp |
Investar Holding and Northeast Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investar Holding and Northeast Bancorp
The main advantage of trading using opposite Investar Holding and Northeast Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investar Holding position performs unexpectedly, Northeast Bancorp 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 Northeast Bancorp will offset losses from the drop in Northeast Bancorp'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 |
| Northeast Bancorp vs. Home Federal Bancorp | Northeast Bancorp vs. Mainstreet Bank | Northeast Bancorp vs. Investar Holding Corp | Northeast Bancorp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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