Correlation Between NYSE Composite and TriCo Bancshares
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and TriCo Bancshares 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 NYSE Composite and TriCo Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and TriCo Bancshares, you can compare the effects of market volatilities on NYSE Composite and TriCo Bancshares 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 NYSE Composite with a short position of TriCo Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and TriCo Bancshares.
Diversification Opportunities for NYSE Composite and TriCo Bancshares
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and TriCo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and TriCo Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TriCo Bancshares and NYSE Composite 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 NYSE Composite are associated (or correlated) with TriCo Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TriCo Bancshares has no effect on the direction of NYSE Composite i.e., NYSE Composite and TriCo Bancshares go up and down completely randomly.
Pair Corralation between NYSE Composite and TriCo Bancshares
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.55 times less return on investment than TriCo Bancshares. But when comparing it to its historical volatility, NYSE Composite is 3.5 times less risky than TriCo Bancshares. It trades about 0.14 of its potential returns per unit of risk. TriCo Bancshares is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,673 in TriCo Bancshares on August 31, 2024 and sell it today you would earn a total of 1,161 from holding TriCo Bancshares or generate 31.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. TriCo Bancshares
Performance |
| Timeline |
NYSE Composite and TriCo Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
TriCo Bancshares
Pair trading matchups for TriCo Bancshares
Pair Trading with NYSE Composite and TriCo Bancshares
The main advantage of trading using opposite NYSE Composite and TriCo Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, TriCo Bancshares 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 TriCo Bancshares will offset losses from the drop in TriCo Bancshares' long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| TriCo Bancshares vs. First Northwest Bancorp | TriCo Bancshares vs. Community West Bancshares | TriCo Bancshares vs. First Financial Northwest | TriCo Bancshares vs. Great Southern 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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