Correlation Between Katahdin Bankshares and QNB Corp
Can any of the company-specific risk be diversified away by investing in both Katahdin Bankshares and QNB Corp 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 QNB Corp 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 QNB Corp, you can compare the effects of market volatilities on Katahdin Bankshares and QNB Corp 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 QNB Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Katahdin Bankshares and QNB Corp.
Diversification Opportunities for Katahdin Bankshares and QNB Corp
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Katahdin and QNB is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Katahdin Bankshares Corp and QNB Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QNB Corp 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 QNB Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QNB Corp has no effect on the direction of Katahdin Bankshares i.e., Katahdin Bankshares and QNB Corp go up and down completely randomly.
Pair Corralation between Katahdin Bankshares and QNB Corp
Given the investment horizon of 90 days Katahdin Bankshares Corp is expected to under-perform the QNB Corp. In addition to that, Katahdin Bankshares is 4.46 times more volatile than QNB Corp. It trades about -0.12 of its total potential returns per unit of risk. QNB Corp is currently generating about 0.02 per unit of volatility. If you would invest 3,392 in QNB Corp on November 2, 2024 and sell it today you would earn a total of 3.00 from holding QNB Corp or generate 0.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Katahdin Bankshares Corp vs. QNB Corp
Performance |
| Timeline |
| Katahdin Bankshares Corp |
| QNB Corp |
Katahdin Bankshares and QNB Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Katahdin Bankshares and QNB Corp
The main advantage of trading using opposite Katahdin Bankshares and QNB Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Katahdin Bankshares position performs unexpectedly, QNB Corp 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 QNB Corp will offset losses from the drop in QNB Corp's long position.| Katahdin Bankshares vs. DTF Tax Free | Katahdin Bankshares vs. MFS Investment Grade | Katahdin Bankshares vs. Nuveen California Select | Katahdin Bankshares vs. Federated Premier Municipal |
| QNB Corp vs. Eastern Michigan Financial | QNB Corp vs. Commercial National Financial | QNB Corp vs. Mifflinburg Bancorp | QNB Corp vs. Apollo 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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