Correlation Between Lumbee Guaranty and BEO Bancorp
Can any of the company-specific risk be diversified away by investing in both Lumbee Guaranty and BEO Bancorp 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 Lumbee Guaranty and BEO Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumbee Guaranty Bank and BEO Bancorp, you can compare the effects of market volatilities on Lumbee Guaranty and BEO Bancorp 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 Lumbee Guaranty with a short position of BEO Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumbee Guaranty and BEO Bancorp.
Diversification Opportunities for Lumbee Guaranty and BEO Bancorp
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lumbee and BEO is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lumbee Guaranty Bank and BEO Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEO Bancorp and Lumbee Guaranty 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 Lumbee Guaranty Bank are associated (or correlated) with BEO Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEO Bancorp has no effect on the direction of Lumbee Guaranty i.e., Lumbee Guaranty and BEO Bancorp go up and down completely randomly.
Pair Corralation between Lumbee Guaranty and BEO Bancorp
Given the investment horizon of 90 days Lumbee Guaranty Bank is expected to generate 2.76 times more return on investment than BEO Bancorp. However, Lumbee Guaranty is 2.76 times more volatile than BEO Bancorp. It trades about 0.14 of its potential returns per unit of risk. BEO Bancorp is currently generating about 0.11 per unit of risk. If you would invest 1,135 in Lumbee Guaranty Bank on August 31, 2024 and sell it today you would earn a total of 55.00 from holding Lumbee Guaranty Bank or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lumbee Guaranty Bank vs. BEO Bancorp
Performance |
| Timeline |
| Lumbee Guaranty Bank |
| BEO Bancorp |
Lumbee Guaranty and BEO Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumbee Guaranty and BEO Bancorp
The main advantage of trading using opposite Lumbee Guaranty and BEO Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumbee Guaranty position performs unexpectedly, BEO Bancorp 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 BEO Bancorp will offset losses from the drop in BEO Bancorp's long position.| Lumbee Guaranty vs. Bank Mandiri Persero | Lumbee Guaranty vs. Piraeus Bank SA | Lumbee Guaranty vs. Eurobank Ergasias Services | Lumbee Guaranty vs. Kasikornbank Public Co |
| BEO Bancorp vs. CCSB Financial Corp | BEO Bancorp vs. Delhi Bank Corp | BEO Bancorp vs. First Community Financial | BEO Bancorp vs. First Community |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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