Correlation Between RBB Bancorp and PCB Bancorp
Can any of the company-specific risk be diversified away by investing in both RBB Bancorp and PCB 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 RBB Bancorp and PCB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RBB Bancorp and PCB Bancorp, you can compare the effects of market volatilities on RBB Bancorp and PCB 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 RBB Bancorp with a short position of PCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBB Bancorp and PCB Bancorp.
Diversification Opportunities for RBB Bancorp and PCB Bancorp
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RBB and PCB is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding RBB Bancorp and PCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCB Bancorp and RBB Bancorp 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 RBB Bancorp are associated (or correlated) with PCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCB Bancorp has no effect on the direction of RBB Bancorp i.e., RBB Bancorp and PCB Bancorp go up and down completely randomly.
Pair Corralation between RBB Bancorp and PCB Bancorp
Considering the 90-day investment horizon RBB Bancorp is expected to generate 1.27 times less return on investment than PCB Bancorp. But when comparing it to its historical volatility, RBB Bancorp is 1.01 times less risky than PCB Bancorp. It trades about 0.12 of its potential returns per unit of risk. PCB Bancorp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,472 in PCB Bancorp on August 31, 2024 and sell it today you would earn a total of 677.00 from holding PCB Bancorp or generate 45.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBB Bancorp vs. PCB Bancorp
Performance |
| Timeline |
| RBB Bancorp |
| PCB Bancorp |
RBB Bancorp and PCB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBB Bancorp and PCB Bancorp
The main advantage of trading using opposite RBB Bancorp and PCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBB Bancorp position performs unexpectedly, PCB 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 PCB Bancorp will offset losses from the drop in PCB Bancorp's long position.| RBB Bancorp vs. OP Bancorp | RBB Bancorp vs. Hanmi Financial | RBB Bancorp vs. Hope Bancorp | RBB Bancorp vs. Northeast Bancorp |
| PCB Bancorp vs. Hope Bancorp | PCB Bancorp vs. OP Bancorp | PCB Bancorp vs. Financial Institutions | PCB Bancorp vs. LINKBANCORP |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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