Correlation Between Katahdin Bankshares and Freedom Bank
Can any of the company-specific risk be diversified away by investing in both Katahdin Bankshares and Freedom 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 Katahdin Bankshares and Freedom Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Katahdin Bankshares Corp and Freedom Bank of, you can compare the effects of market volatilities on Katahdin Bankshares and Freedom 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 Katahdin Bankshares with a short position of Freedom Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Katahdin Bankshares and Freedom Bank.
Diversification Opportunities for Katahdin Bankshares and Freedom Bank
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Katahdin and Freedom is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Katahdin Bankshares Corp and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank and Katahdin Bankshares 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 Katahdin Bankshares Corp are associated (or correlated) with Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of Katahdin Bankshares i.e., Katahdin Bankshares and Freedom Bank go up and down completely randomly.
Pair Corralation between Katahdin Bankshares and Freedom Bank
Given the investment horizon of 90 days Katahdin Bankshares Corp is expected to under-perform the Freedom Bank. But the otc stock apears to be less risky and, when comparing its historical volatility, Katahdin Bankshares Corp is 1.0 times less risky than Freedom Bank. The otc stock trades about -0.36 of its potential returns per unit of risk. The Freedom Bank of is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,061 in Freedom Bank of on October 20, 2024 and sell it today you would lose (12.00) from holding Freedom Bank of or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Katahdin Bankshares Corp vs. Freedom Bank of
Performance |
| Timeline |
| Katahdin Bankshares Corp |
| Freedom Bank |
Katahdin Bankshares and Freedom Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Katahdin Bankshares and Freedom Bank
The main advantage of trading using opposite Katahdin Bankshares and Freedom Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Katahdin Bankshares position performs unexpectedly, Freedom 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 Freedom Bank will offset losses from the drop in Freedom Bank's long position.| Katahdin Bankshares vs. Electronic Arts | Katahdin Bankshares vs. Nintendo Co ADR | Katahdin Bankshares vs. Roblox Corp | Katahdin Bankshares vs. NetEase |
| Freedom Bank vs. National Capital Bank | Freedom Bank vs. Community Heritage Financial | Freedom Bank vs. Citizens Financial Corp | Freedom Bank vs. Bank of Idaho |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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