Correlation Between Main Street and Wayne Savings
Can any of the company-specific risk be diversified away by investing in both Main Street and Wayne Savings 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 Wayne Savings 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 Wayne Savings Bancshares, you can compare the effects of market volatilities on Main Street and Wayne Savings 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 Wayne Savings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and Wayne Savings.
Diversification Opportunities for Main Street and Wayne Savings
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Main and Wayne is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Financial and Wayne Savings Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayne Savings Bancshares 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 Wayne Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayne Savings Bancshares has no effect on the direction of Main Street i.e., Main Street and Wayne Savings go up and down completely randomly.
Pair Corralation between Main Street and Wayne Savings
Given the investment horizon of 90 days Main Street Financial is expected to under-perform the Wayne Savings. In addition to that, Main Street is 1.41 times more volatile than Wayne Savings Bancshares. It trades about 0.0 of its total potential returns per unit of risk. Wayne Savings Bancshares is currently generating about 0.17 per unit of volatility. If you would invest 2,645 in Wayne Savings Bancshares on August 28, 2024 and sell it today you would earn a total of 196.00 from holding Wayne Savings Bancshares or generate 7.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 5.04% |
| Values | Daily Returns |
Main Street Financial vs. Wayne Savings Bancshares
Performance |
| Timeline |
| Main Street Financial |
| Wayne Savings Bancshares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Main Street and Wayne Savings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and Wayne Savings
The main advantage of trading using opposite Main Street and Wayne Savings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, Wayne Savings 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 Wayne Savings will offset losses from the drop in Wayne Savings' long position.The idea behind Main Street Financial and Wayne Savings Bancshares pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Wayne Savings vs. First IC | Wayne Savings vs. CCFNB Bancorp | Wayne Savings vs. Glen Burnie Bancorp | Wayne Savings vs. Main Street Financial |
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 CEOs Directory module to screen CEOs from public companies around the world.
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