Correlation Between Main Street and Susquehanna Community
Can any of the company-specific risk be diversified away by investing in both Main Street and Susquehanna 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 Main Street and Susquehanna Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Financial and Susquehanna Community Financial, you can compare the effects of market volatilities on Main Street and Susquehanna 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 Main Street with a short position of Susquehanna Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and Susquehanna Community.
Diversification Opportunities for Main Street and Susquehanna Community
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Main and Susquehanna is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Financial and Susquehanna Community Financia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Susquehanna Community and Main Street 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 Main Street Financial are associated (or correlated) with Susquehanna Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Susquehanna Community has no effect on the direction of Main Street i.e., Main Street and Susquehanna Community go up and down completely randomly.
Pair Corralation between Main Street and Susquehanna Community
Given the investment horizon of 90 days Main Street is expected to generate 9.8 times less return on investment than Susquehanna Community. But when comparing it to its historical volatility, Main Street Financial is 2.5 times less risky than Susquehanna Community. It trades about 0.01 of its potential returns per unit of risk. Susquehanna Community Financial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,550 in Susquehanna Community Financial on August 26, 2024 and sell it today you would lose (305.00) from holding Susquehanna Community Financial or give up 19.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.29% |
| Values | Daily Returns |
Main Street Financial vs. Susquehanna Community Financia
Performance |
| Timeline |
| Main Street Financial |
| Susquehanna Community |
Main Street and Susquehanna Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and Susquehanna Community
The main advantage of trading using opposite Main Street and Susquehanna Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, Susquehanna 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 Susquehanna Community will offset losses from the drop in Susquehanna Community's long position.| Main Street vs. CCFNB Bancorp | Main Street vs. Burke Herbert Financial | Main Street vs. First IC | Main Street vs. Enterprise Financial Services |
| Susquehanna Community vs. CCFNB Bancorp | Susquehanna Community vs. Mifflinburg Bancorp | Susquehanna Community vs. Woodlands Financial Services | Susquehanna Community vs. Penns Woods 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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