Correlation Between Potomac Bancshares and Greenville Federal
Can any of the company-specific risk be diversified away by investing in both Potomac Bancshares and Greenville Federal 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 Greenville Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Potomac Bancshares and Greenville Federal Financial, you can compare the effects of market volatilities on Potomac Bancshares and Greenville Federal 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 Greenville Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Potomac Bancshares and Greenville Federal.
Diversification Opportunities for Potomac Bancshares and Greenville Federal
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Potomac and Greenville is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Potomac Bancshares and Greenville Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenville Federal 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 Greenville Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenville Federal has no effect on the direction of Potomac Bancshares i.e., Potomac Bancshares and Greenville Federal go up and down completely randomly.
Pair Corralation between Potomac Bancshares and Greenville Federal
Given the investment horizon of 90 days Potomac Bancshares is expected to generate 2.24 times less return on investment than Greenville Federal. But when comparing it to its historical volatility, Potomac Bancshares is 1.66 times less risky than Greenville Federal. It trades about 0.02 of its potential returns per unit of risk. Greenville Federal Financial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 660.00 in Greenville Federal Financial on August 29, 2024 and sell it today you would earn a total of 40.00 from holding Greenville Federal Financial or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 84.94% |
| Values | Daily Returns |
Potomac Bancshares vs. Greenville Federal Financial
Performance |
| Timeline |
| Potomac Bancshares |
| Greenville Federal |
Potomac Bancshares and Greenville Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Potomac Bancshares and Greenville Federal
The main advantage of trading using opposite Potomac Bancshares and Greenville Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Potomac Bancshares position performs unexpectedly, Greenville Federal 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 Greenville Federal will offset losses from the drop in Greenville Federal's long position.| Potomac Bancshares vs. Apollo Bancorp | Potomac Bancshares vs. The Farmers Bank | Potomac Bancshares vs. Community Bankers | Potomac Bancshares vs. CCSB Financial Corp |
| Greenville Federal vs. First Bankers Trustshares | Greenville Federal vs. First Ottawa Bancshares | Greenville Federal vs. Coastal Carolina Bancshares | Greenville Federal vs. Citizens Bancorp Investment |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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