Correlation Between QNB Corp and Lyons Bancorp
Can any of the company-specific risk be diversified away by investing in both QNB Corp and Lyons Bancorp 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 QNB Corp and Lyons Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between QNB Corp and Lyons Bancorp, you can compare the effects of market volatilities on QNB Corp and Lyons Bancorp 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 QNB Corp with a short position of Lyons Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of QNB Corp and Lyons Bancorp.
Diversification Opportunities for QNB Corp and Lyons Bancorp
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between QNB and Lyons is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding QNB Corp and Lyons Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyons Bancorp and QNB Corp 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 QNB Corp are associated (or correlated) with Lyons Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyons Bancorp has no effect on the direction of QNB Corp i.e., QNB Corp and Lyons Bancorp go up and down completely randomly.
Pair Corralation between QNB Corp and Lyons Bancorp
Given the investment horizon of 90 days QNB Corp is expected to generate 0.86 times more return on investment than Lyons Bancorp. However, QNB Corp is 1.16 times less risky than Lyons Bancorp. It trades about 0.12 of its potential returns per unit of risk. Lyons Bancorp is currently generating about -0.03 per unit of risk. If you would invest 2,277 in QNB Corp on September 12, 2024 and sell it today you would earn a total of 1,023 from holding QNB Corp or generate 44.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.96% |
| Values | Daily Returns |
QNB Corp vs. Lyons Bancorp
Performance |
| Timeline |
| QNB Corp |
| Lyons Bancorp |
QNB Corp and Lyons Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QNB Corp and Lyons Bancorp
The main advantage of trading using opposite QNB Corp and Lyons Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QNB Corp position performs unexpectedly, Lyons Bancorp 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 Lyons Bancorp will offset losses from the drop in Lyons Bancorp's long position.| QNB Corp vs. Eastern Michigan Financial | QNB Corp vs. Commercial National Financial | QNB Corp vs. Mifflinburg Bancorp | QNB Corp vs. Apollo Bancorp |
| Lyons Bancorp vs. FS Bancorp | Lyons Bancorp vs. Eastern Michigan Financial | Lyons Bancorp vs. Grand River Commerce | Lyons Bancorp vs. Bank of Botetourt |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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