Correlation Between Prime Meridian and American Riviera
Can any of the company-specific risk be diversified away by investing in both Prime Meridian and American Riviera 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 Prime Meridian and American Riviera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Meridian Holding and American Riviera Bank, you can compare the effects of market volatilities on Prime Meridian and American Riviera 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 Prime Meridian with a short position of American Riviera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Meridian and American Riviera.
Diversification Opportunities for Prime Meridian and American Riviera
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prime and American is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Prime Meridian Holding and American Riviera Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Riviera Bank and Prime Meridian 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 Prime Meridian Holding are associated (or correlated) with American Riviera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Riviera Bank has no effect on the direction of Prime Meridian i.e., Prime Meridian and American Riviera go up and down completely randomly.
Pair Corralation between Prime Meridian and American Riviera
Given the investment horizon of 90 days Prime Meridian Holding is expected to generate 2.44 times more return on investment than American Riviera. However, Prime Meridian is 2.44 times more volatile than American Riviera Bank. It trades about 0.06 of its potential returns per unit of risk. American Riviera Bank is currently generating about 0.07 per unit of risk. If you would invest 2,275 in Prime Meridian Holding on November 9, 2024 and sell it today you would earn a total of 653.00 from holding Prime Meridian Holding or generate 28.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.13% |
| Values | Daily Returns |
Prime Meridian Holding vs. American Riviera Bank
Performance |
| Timeline |
| Prime Meridian Holding |
| American Riviera Bank |
Prime Meridian and American Riviera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Meridian and American Riviera
The main advantage of trading using opposite Prime Meridian and American Riviera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Meridian position performs unexpectedly, American Riviera 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 American Riviera will offset losses from the drop in American Riviera's long position.| Prime Meridian vs. Village Bank and | Prime Meridian vs. William Penn Bancorp | Prime Meridian vs. Pathfinder Bancorp |
| American Riviera vs. Century Next Financial | American Riviera vs. Southern California Bancorp | American Riviera vs. American Business Bk | American Riviera vs. Avidbank Holdings |
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 Stocks Directory module to find actively traded stocks across global markets.
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