Correlation Between Bank Central and Isabella Bank
Can any of the company-specific risk be diversified away by investing in both Bank Central and Isabella 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 Bank Central and Isabella Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and Isabella Bank, you can compare the effects of market volatilities on Bank Central and Isabella 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 Bank Central with a short position of Isabella Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Isabella Bank.
Diversification Opportunities for Bank Central and Isabella Bank
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Isabella is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Isabella Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isabella Bank and Bank Central 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 Bank Central Asia are associated (or correlated) with Isabella Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isabella Bank has no effect on the direction of Bank Central i.e., Bank Central and Isabella Bank go up and down completely randomly.
Pair Corralation between Bank Central and Isabella Bank
Assuming the 90 days horizon Bank Central is expected to generate 4.2 times less return on investment than Isabella Bank. But when comparing it to its historical volatility, Bank Central Asia is 1.64 times less risky than Isabella Bank. It trades about 0.02 of its potential returns per unit of risk. Isabella Bank is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,934 in Isabella Bank on September 2, 2024 and sell it today you would earn a total of 556.00 from holding Isabella Bank or generate 28.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 89.78% |
| Values | Daily Returns |
Bank Central Asia vs. Isabella Bank
Performance |
| Timeline |
| Bank Central Asia |
| Isabella Bank |
Bank Central and Isabella Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Isabella Bank
The main advantage of trading using opposite Bank Central and Isabella Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Isabella 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 Isabella Bank will offset losses from the drop in Isabella Bank's long position.| Bank Central vs. Nedbank Group | Bank Central vs. Standard Bank Group | Bank Central vs. Kasikornbank Public Co | Bank Central vs. KBC Groep NV |
| Isabella Bank vs. Home Federal Bancorp | Isabella Bank vs. Magyar Bancorp | Isabella Bank vs. ChoiceOne Financial Services | Isabella Bank vs. Heritage Commerce Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |