Correlation Between PSB Holdings and American Business
Can any of the company-specific risk be diversified away by investing in both PSB Holdings and American Business 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 PSB Holdings and American Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PSB Holdings and American Business Bk, you can compare the effects of market volatilities on PSB Holdings and American Business 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 PSB Holdings with a short position of American Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of PSB Holdings and American Business.
Diversification Opportunities for PSB Holdings and American Business
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PSB and American is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding PSB Holdings and American Business Bk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Business and PSB 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 PSB Holdings are associated (or correlated) with American Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Business has no effect on the direction of PSB Holdings i.e., PSB Holdings and American Business go up and down completely randomly.
Pair Corralation between PSB Holdings and American Business
Given the investment horizon of 90 days PSB Holdings is expected to generate 0.82 times more return on investment than American Business. However, PSB Holdings is 1.22 times less risky than American Business. It trades about 0.06 of its potential returns per unit of risk. American Business Bk is currently generating about 0.04 per unit of risk. If you would invest 2,112 in PSB Holdings on December 11, 2024 and sell it today you would earn a total of 508.00 from holding PSB Holdings or generate 24.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 65.94% |
| Values | Daily Returns |
PSB Holdings vs. American Business Bk
Performance |
| Timeline |
| PSB Holdings |
| American Business |
PSB Holdings and American Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PSB Holdings and American Business
The main advantage of trading using opposite PSB Holdings and American Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PSB Holdings position performs unexpectedly, American Business 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 Business will offset losses from the drop in American Business' long position.| PSB Holdings vs. Eagle Financial Services | PSB Holdings vs. National Capital Bank | PSB Holdings vs. Community Heritage Financial | PSB Holdings vs. Citizens Financial Corp |
| American Business vs. Private Bancorp of | American Business vs. Avidbank Holdings | American Business vs. Century Next Financial | American Business vs. American Riviera Bank |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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