Correlation Between LCNB and Texas Community
Can any of the company-specific risk be diversified away by investing in both LCNB and Texas Community 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 LCNB and Texas Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LCNB Corporation and Texas Community Bancshares, you can compare the effects of market volatilities on LCNB and Texas Community 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 LCNB with a short position of Texas Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of LCNB and Texas Community.
Diversification Opportunities for LCNB and Texas Community
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between LCNB and Texas is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding LCNB Corp. and Texas Community Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Community Banc and LCNB 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 LCNB Corporation are associated (or correlated) with Texas Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Community Banc has no effect on the direction of LCNB i.e., LCNB and Texas Community go up and down completely randomly.
Pair Corralation between LCNB and Texas Community
Given the investment horizon of 90 days LCNB Corporation is expected to generate 2.6 times more return on investment than Texas Community. However, LCNB is 2.6 times more volatile than Texas Community Bancshares. It trades about 0.45 of its potential returns per unit of risk. Texas Community Bancshares is currently generating about 0.01 per unit of risk. If you would invest 1,516 in LCNB Corporation on August 28, 2024 and sell it today you would earn a total of 247.00 from holding LCNB Corporation or generate 16.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
LCNB Corp. vs. Texas Community Bancshares
Performance |
| Timeline |
| LCNB |
| Texas Community Banc |
LCNB and Texas Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LCNB and Texas Community
The main advantage of trading using opposite LCNB and Texas Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LCNB position performs unexpectedly, Texas Community 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 Texas Community will offset losses from the drop in Texas Community's long position.| LCNB vs. Affinity Bancshares | LCNB vs. Main Street Financial | LCNB vs. Mainstreet Bank | LCNB vs. Oak Valley Bancorp |
| Texas Community vs. Richmond Mutual Bancorporation | Texas Community vs. LCNB Corporation | Texas Community vs. Prime Meridian Holding | Texas Community vs. William Penn 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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