Correlation Between Potomac Bancshares and Western Asset
Can any of the company-specific risk be diversified away by investing in both Potomac Bancshares and Western Asset 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 Potomac Bancshares and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Potomac Bancshares and Western Asset Global, you can compare the effects of market volatilities on Potomac Bancshares and Western Asset 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 Potomac Bancshares with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Potomac Bancshares and Western Asset.
Diversification Opportunities for Potomac Bancshares and Western Asset
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Potomac and Western is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Potomac Bancshares and Western Asset Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Global and Potomac Bancshares 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 Potomac Bancshares are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Global has no effect on the direction of Potomac Bancshares i.e., Potomac Bancshares and Western Asset go up and down completely randomly.
Pair Corralation between Potomac Bancshares and Western Asset
Given the investment horizon of 90 days Potomac Bancshares is expected to generate 5.44 times more return on investment than Western Asset. However, Potomac Bancshares is 5.44 times more volatile than Western Asset Global. It trades about 0.15 of its potential returns per unit of risk. Western Asset Global is currently generating about -0.11 per unit of risk. If you would invest 1,559 in Potomac Bancshares on September 12, 2024 and sell it today you would earn a total of 133.00 from holding Potomac Bancshares or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Potomac Bancshares vs. Western Asset Global
Performance |
| Timeline |
| Potomac Bancshares |
| Western Asset Global |
Potomac Bancshares and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Potomac Bancshares and Western Asset
The main advantage of trading using opposite Potomac Bancshares and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Potomac Bancshares position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Potomac Bancshares vs. Freedom Bank of | Potomac Bancshares vs. HUMANA INC | Potomac Bancshares vs. Barloworld Ltd ADR | Potomac Bancshares vs. Morningstar Unconstrained Allocation |
| Western Asset vs. Western Asset High | Western Asset vs. Western Asset Global | Western Asset vs. European Equity Closed | Western Asset vs. Doubleline Opportunistic Credit |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |