Correlation Between National Bankshares and ESSA Bancorp
Can any of the company-specific risk be diversified away by investing in both National Bankshares and ESSA 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 National Bankshares and ESSA Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bankshares and ESSA Bancorp, you can compare the effects of market volatilities on National Bankshares and ESSA 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 National Bankshares with a short position of ESSA Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bankshares and ESSA Bancorp.
Diversification Opportunities for National Bankshares and ESSA Bancorp
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and ESSA is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding National Bankshares and ESSA Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSA Bancorp and National Bankshares 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 National Bankshares are associated (or correlated) with ESSA Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSA Bancorp has no effect on the direction of National Bankshares i.e., National Bankshares and ESSA Bancorp go up and down completely randomly.
Pair Corralation between National Bankshares and ESSA Bancorp
Given the investment horizon of 90 days National Bankshares is expected to generate 1.66 times less return on investment than ESSA Bancorp. In addition to that, National Bankshares is 1.8 times more volatile than ESSA Bancorp. It trades about 0.11 of its total potential returns per unit of risk. ESSA Bancorp is currently generating about 0.32 per unit of volatility. If you would invest 1,914 in ESSA Bancorp on November 3, 2024 and sell it today you would earn a total of 177.00 from holding ESSA Bancorp or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
National Bankshares vs. ESSA Bancorp
Performance |
| Timeline |
| National Bankshares |
| ESSA Bancorp |
National Bankshares and ESSA Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bankshares and ESSA Bancorp
The main advantage of trading using opposite National Bankshares and ESSA Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bankshares position performs unexpectedly, ESSA 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 ESSA Bancorp will offset losses from the drop in ESSA Bancorp's long position.| National Bankshares vs. Finward Bancorp | National Bankshares vs. Community West Bancshares | National Bankshares vs. First Financial Northwest | National Bankshares vs. Oak Valley Bancorp |
| ESSA Bancorp vs. Community West Bancshares | ESSA Bancorp vs. First Northwest Bancorp | ESSA Bancorp vs. First Community | ESSA Bancorp vs. Oak Valley 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |