Correlation Between Lake Shore and ChoiceOne Financial
Can any of the company-specific risk be diversified away by investing in both Lake Shore and ChoiceOne Financial 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 Lake Shore and ChoiceOne Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lake Shore Bancorp and ChoiceOne Financial Services, you can compare the effects of market volatilities on Lake Shore and ChoiceOne Financial 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 Lake Shore with a short position of ChoiceOne Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Shore and ChoiceOne Financial.
Diversification Opportunities for Lake Shore and ChoiceOne Financial
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lake and ChoiceOne is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lake Shore Bancorp and ChoiceOne Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChoiceOne Financial and Lake Shore 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 Lake Shore Bancorp are associated (or correlated) with ChoiceOne Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChoiceOne Financial has no effect on the direction of Lake Shore i.e., Lake Shore and ChoiceOne Financial go up and down completely randomly.
Pair Corralation between Lake Shore and ChoiceOne Financial
Given the investment horizon of 90 days Lake Shore Bancorp is expected to under-perform the ChoiceOne Financial. But the stock apears to be less risky and, when comparing its historical volatility, Lake Shore Bancorp is 1.26 times less risky than ChoiceOne Financial. The stock trades about -0.01 of its potential returns per unit of risk. The ChoiceOne Financial Services is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,066 in ChoiceOne Financial Services on August 28, 2024 and sell it today you would earn a total of 605.00 from holding ChoiceOne Financial Services or generate 19.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Lake Shore Bancorp vs. ChoiceOne Financial Services
Performance |
| Timeline |
| Lake Shore Bancorp |
| ChoiceOne Financial |
Lake Shore and ChoiceOne Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Shore and ChoiceOne Financial
The main advantage of trading using opposite Lake Shore and ChoiceOne Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Shore position performs unexpectedly, ChoiceOne Financial 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 ChoiceOne Financial will offset losses from the drop in ChoiceOne Financial's long position.| Lake Shore vs. Home Federal Bancorp | Lake Shore vs. Magyar Bancorp | Lake Shore vs. Community West Bancshares |
| ChoiceOne Financial vs. Fifth Third Bancorp | ChoiceOne Financial vs. Zions Bancorporation | ChoiceOne Financial vs. Huntington Bancshares Incorporated | ChoiceOne Financial vs. Comerica |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |