Correlation Between Private Bancorp and Mainstreet Bank
Can any of the company-specific risk be diversified away by investing in both Private Bancorp and Mainstreet 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 Private Bancorp and Mainstreet Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Private Bancorp of and Mainstreet Bank, you can compare the effects of market volatilities on Private Bancorp and Mainstreet 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 Private Bancorp with a short position of Mainstreet Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Private Bancorp and Mainstreet Bank.
Diversification Opportunities for Private Bancorp and Mainstreet Bank
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Private and Mainstreet is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Private Bancorp of and Mainstreet Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstreet Bank and Private 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 Private Bancorp of are associated (or correlated) with Mainstreet Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstreet Bank has no effect on the direction of Private Bancorp i.e., Private Bancorp and Mainstreet Bank go up and down completely randomly.
Pair Corralation between Private Bancorp and Mainstreet Bank
Given the investment horizon of 90 days Private Bancorp of is expected to generate 0.39 times more return on investment than Mainstreet Bank. However, Private Bancorp of is 2.54 times less risky than Mainstreet Bank. It trades about -0.16 of its potential returns per unit of risk. Mainstreet Bank is currently generating about -0.18 per unit of risk. If you would invest 6,000 in Private Bancorp of on November 27, 2024 and sell it today you would lose (95.00) from holding Private Bancorp of or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Private Bancorp of vs. Mainstreet Bank
Performance |
| Timeline |
| Private Bancorp |
| Mainstreet Bank |
Private Bancorp and Mainstreet Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Private Bancorp and Mainstreet Bank
The main advantage of trading using opposite Private Bancorp and Mainstreet Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Private Bancorp position performs unexpectedly, Mainstreet 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 Mainstreet Bank will offset losses from the drop in Mainstreet Bank's long position.| Private Bancorp vs. Prime Meridian Holding | Private Bancorp vs. Mainstreet Bank | Private Bancorp vs. Avidbank Holdings |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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