Correlation Between Northeast Bancorp and LINKBANCORP
Can any of the company-specific risk be diversified away by investing in both Northeast Bancorp and LINKBANCORP 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 Northeast Bancorp and LINKBANCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northeast Bancorp and LINKBANCORP, you can compare the effects of market volatilities on Northeast Bancorp and LINKBANCORP 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 Northeast Bancorp with a short position of LINKBANCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northeast Bancorp and LINKBANCORP.
Diversification Opportunities for Northeast Bancorp and LINKBANCORP
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northeast and LINKBANCORP is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Northeast Bancorp and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP and Northeast Bancorp 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 Northeast Bancorp are associated (or correlated) with LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of Northeast Bancorp i.e., Northeast Bancorp and LINKBANCORP go up and down completely randomly.
Pair Corralation between Northeast Bancorp and LINKBANCORP
Considering the 90-day investment horizon Northeast Bancorp is expected to generate 1.03 times less return on investment than LINKBANCORP. In addition to that, Northeast Bancorp is 1.18 times more volatile than LINKBANCORP. It trades about 0.14 of its total potential returns per unit of risk. LINKBANCORP is currently generating about 0.17 per unit of volatility. If you would invest 695.00 in LINKBANCORP on August 31, 2024 and sell it today you would earn a total of 65.00 from holding LINKBANCORP or generate 9.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Northeast Bancorp vs. LINKBANCORP
Performance |
| Timeline |
| Northeast Bancorp |
| LINKBANCORP |
Northeast Bancorp and LINKBANCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northeast Bancorp and LINKBANCORP
The main advantage of trading using opposite Northeast Bancorp and LINKBANCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northeast Bancorp position performs unexpectedly, LINKBANCORP 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 LINKBANCORP will offset losses from the drop in LINKBANCORP's long position.| Northeast Bancorp vs. KeyCorp | Northeast Bancorp vs. Comerica | Northeast Bancorp vs. First Horizon National | Northeast Bancorp vs. Western Alliance Bancorporation |
| LINKBANCORP vs. Home Federal Bancorp | LINKBANCORP vs. Lake Shore Bancorp | LINKBANCORP vs. Community West Bancshares | LINKBANCORP vs. Magyar 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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