Correlation Between Mainstreet Bank and Investar Holding
Can any of the company-specific risk be diversified away by investing in both Mainstreet Bank and Investar Holding 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 Mainstreet Bank and Investar Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstreet Bank and Investar Holding Corp, you can compare the effects of market volatilities on Mainstreet Bank and Investar Holding 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 Mainstreet Bank with a short position of Investar Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstreet Bank and Investar Holding.
Diversification Opportunities for Mainstreet Bank and Investar Holding
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mainstreet and Investar is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Mainstreet Bank and Investar Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investar Holding Corp and Mainstreet Bank 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 Mainstreet Bank are associated (or correlated) with Investar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investar Holding Corp has no effect on the direction of Mainstreet Bank i.e., Mainstreet Bank and Investar Holding go up and down completely randomly.
Pair Corralation between Mainstreet Bank and Investar Holding
Given the investment horizon of 90 days Mainstreet Bank is expected to under-perform the Investar Holding. But the stock apears to be less risky and, when comparing its historical volatility, Mainstreet Bank is 1.65 times less risky than Investar Holding. The stock trades about -0.38 of its potential returns per unit of risk. The Investar Holding Corp is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 2,171 in Investar Holding Corp on October 22, 2024 and sell it today you would lose (159.00) from holding Investar Holding Corp or give up 7.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstreet Bank vs. Investar Holding Corp
Performance |
| Timeline |
| Mainstreet Bank |
| Investar Holding Corp |
Mainstreet Bank and Investar Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstreet Bank and Investar Holding
The main advantage of trading using opposite Mainstreet Bank and Investar Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstreet Bank position performs unexpectedly, Investar Holding 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 Investar Holding will offset losses from the drop in Investar Holding's long position.| Mainstreet Bank vs. Oak Valley Bancorp | Mainstreet Bank vs. Home Federal Bancorp | Mainstreet Bank vs. LINKBANCORP | Mainstreet Bank vs. First Northwest Bancorp |
| Investar Holding vs. Magyar Bancorp | Investar Holding vs. Home Federal Bancorp | Investar Holding vs. Community West Bancshares | Investar Holding vs. First Northwest 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |