Correlation Between OptimumBank Holdings and TrustCo Bank
Can any of the company-specific risk be diversified away by investing in both OptimumBank Holdings and TrustCo Bank 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 OptimumBank Holdings and TrustCo Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OptimumBank Holdings and TrustCo Bank Corp, you can compare the effects of market volatilities on OptimumBank Holdings and TrustCo Bank 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 OptimumBank Holdings with a short position of TrustCo Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of OptimumBank Holdings and TrustCo Bank.
Diversification Opportunities for OptimumBank Holdings and TrustCo Bank
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between OptimumBank and TrustCo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding OptimumBank Holdings and TrustCo Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrustCo Bank Corp and OptimumBank Holdings 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 OptimumBank Holdings are associated (or correlated) with TrustCo Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrustCo Bank Corp has no effect on the direction of OptimumBank Holdings i.e., OptimumBank Holdings and TrustCo Bank go up and down completely randomly.
Pair Corralation between OptimumBank Holdings and TrustCo Bank
Given the investment horizon of 90 days OptimumBank Holdings is expected to generate 1.07 times more return on investment than TrustCo Bank. However, OptimumBank Holdings is 1.07 times more volatile than TrustCo Bank Corp. It trades about 0.08 of its potential returns per unit of risk. TrustCo Bank Corp is currently generating about 0.08 per unit of risk. If you would invest 329.00 in OptimumBank Holdings on September 14, 2024 and sell it today you would earn a total of 161.00 from holding OptimumBank Holdings or generate 48.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OptimumBank Holdings vs. TrustCo Bank Corp
Performance |
| Timeline |
| OptimumBank Holdings |
| TrustCo Bank Corp |
OptimumBank Holdings and TrustCo Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OptimumBank Holdings and TrustCo Bank
The main advantage of trading using opposite OptimumBank Holdings and TrustCo Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OptimumBank Holdings position performs unexpectedly, TrustCo Bank 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 TrustCo Bank will offset losses from the drop in TrustCo Bank's long position.| OptimumBank Holdings vs. First National Bank | OptimumBank Holdings vs. TrustCo Bank Corp | OptimumBank Holdings vs. Inter Co Class | OptimumBank Holdings vs. Rhinebeck Bancorp |
| TrustCo Bank vs. Southern Missouri Bancorp | TrustCo Bank vs. IF Bancorp | TrustCo Bank vs. Colony Bankcorp | TrustCo Bank vs. Old Point 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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