Correlation Between LINKBANCORP and Heritage NOLA
Can any of the company-specific risk be diversified away by investing in both LINKBANCORP and Heritage NOLA 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 LINKBANCORP and Heritage NOLA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LINKBANCORP and Heritage NOLA Bancorp, you can compare the effects of market volatilities on LINKBANCORP and Heritage NOLA 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 LINKBANCORP with a short position of Heritage NOLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LINKBANCORP and Heritage NOLA.
Diversification Opportunities for LINKBANCORP and Heritage NOLA
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LINKBANCORP and Heritage is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding LINKBANCORP and Heritage NOLA Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage NOLA Bancorp and LINKBANCORP 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 LINKBANCORP are associated (or correlated) with Heritage NOLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage NOLA Bancorp has no effect on the direction of LINKBANCORP i.e., LINKBANCORP and Heritage NOLA go up and down completely randomly.
Pair Corralation between LINKBANCORP and Heritage NOLA
Given the investment horizon of 90 days LINKBANCORP is expected to generate 1.7 times less return on investment than Heritage NOLA. But when comparing it to its historical volatility, LINKBANCORP is 2.16 times less risky than Heritage NOLA. It trades about 0.05 of its potential returns per unit of risk. Heritage NOLA Bancorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 950.00 in Heritage NOLA Bancorp on September 2, 2024 and sell it today you would earn a total of 447.00 from holding Heritage NOLA Bancorp or generate 47.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LINKBANCORP vs. Heritage NOLA Bancorp
Performance |
| Timeline |
| LINKBANCORP |
| Heritage NOLA Bancorp |
LINKBANCORP and Heritage NOLA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LINKBANCORP and Heritage NOLA
The main advantage of trading using opposite LINKBANCORP and Heritage NOLA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LINKBANCORP position performs unexpectedly, Heritage NOLA 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 Heritage NOLA will offset losses from the drop in Heritage NOLA's long position.| LINKBANCORP vs. Home Federal Bancorp | LINKBANCORP vs. Lake Shore Bancorp | LINKBANCORP vs. Community West Bancshares | LINKBANCORP vs. Magyar Bancorp |
| Heritage NOLA vs. Rhinebeck Bancorp | Heritage NOLA vs. Bridgewater Bancshares Depositary | Heritage NOLA vs. Home Federal Bancorp | Heritage NOLA vs. LINKBANCORP |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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