Correlation Between Peapack Gladstone and Business First
Can any of the company-specific risk be diversified away by investing in both Peapack Gladstone and Business First 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 Peapack Gladstone and Business First into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peapack Gladstone Financial and Business First Bancshares, you can compare the effects of market volatilities on Peapack Gladstone and Business First 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 Peapack Gladstone with a short position of Business First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peapack Gladstone and Business First.
Diversification Opportunities for Peapack Gladstone and Business First
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Peapack and Business is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Peapack Gladstone Financial and Business First Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Business First Bancshares and Peapack Gladstone 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 Peapack Gladstone Financial are associated (or correlated) with Business First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Business First Bancshares has no effect on the direction of Peapack Gladstone i.e., Peapack Gladstone and Business First go up and down completely randomly.
Pair Corralation between Peapack Gladstone and Business First
Considering the 90-day investment horizon Peapack Gladstone is expected to generate 1.04 times less return on investment than Business First. In addition to that, Peapack Gladstone is 1.16 times more volatile than Business First Bancshares. It trades about 0.04 of its total potential returns per unit of risk. Business First Bancshares is currently generating about 0.05 per unit of volatility. If you would invest 2,176 in Business First Bancshares on November 9, 2024 and sell it today you would earn a total of 620.00 from holding Business First Bancshares or generate 28.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Peapack Gladstone Financial vs. Business First Bancshares
Performance |
| Timeline |
| Peapack Gladstone |
| Business First Bancshares |
Peapack Gladstone and Business First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peapack Gladstone and Business First
The main advantage of trading using opposite Peapack Gladstone and Business First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peapack Gladstone position performs unexpectedly, Business First 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 Business First will offset losses from the drop in Business First's long position.| Peapack Gladstone vs. Sound Financial Bancorp | Peapack Gladstone vs. Finward Bancorp | Peapack Gladstone vs. Franklin Financial Services | Peapack Gladstone vs. Community West Bancshares |
| Business First vs. First Community | Business First vs. Community West Bancshares | Business First vs. First Financial Northwest | Business First vs. First Northwest 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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