Correlation Between Summit Bank and Bank of Idaho Holding
Can any of the company-specific risk be diversified away by investing in both Summit Bank and Bank of Idaho Holding 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 Summit Bank and Bank of Idaho Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Bank Group and Bank of Idaho, you can compare the effects of market volatilities on Summit Bank and Bank of Idaho Holding 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 Summit Bank with a short position of Bank of Idaho Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Bank and Bank of Idaho Holding.
Diversification Opportunities for Summit Bank and Bank of Idaho Holding
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Summit and Bank is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Summit Bank Group and Bank of Idaho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Idaho Holding and Summit Bank 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 Summit Bank Group are associated (or correlated) with Bank of Idaho Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Idaho Holding has no effect on the direction of Summit Bank i.e., Summit Bank and Bank of Idaho Holding go up and down completely randomly.
Pair Corralation between Summit Bank and Bank of Idaho Holding
Given the investment horizon of 90 days Summit Bank Group is expected to under-perform the Bank of Idaho Holding. But the pink sheet apears to be less risky and, when comparing its historical volatility, Summit Bank Group is 7.76 times less risky than Bank of Idaho Holding. The pink sheet trades about -0.32 of its potential returns per unit of risk. The Bank of Idaho is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 3,335 in Bank of Idaho on October 25, 2024 and sell it today you would earn a total of 1,935 from holding Bank of Idaho or generate 58.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Summit Bank Group vs. Bank of Idaho
Performance |
| Timeline |
| Summit Bank Group |
| Bank of Idaho Holding |
Summit Bank and Bank of Idaho Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Bank and Bank of Idaho Holding
The main advantage of trading using opposite Summit Bank and Bank of Idaho Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Bank position performs unexpectedly, Bank of Idaho Holding 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 Bank of Idaho Holding will offset losses from the drop in Bank of Idaho Holding's long position.| Summit Bank vs. Savi Financial | Summit Bank vs. Pacific West Bancorp | Summit Bank vs. Commencement Bancorp | Summit Bank vs. Merchants Marine Bancorp |
| Bank of Idaho Holding vs. National Capital Bank | Bank of Idaho Holding vs. Citizens Financial Corp | Bank of Idaho Holding vs. Community Heritage Financial | Bank of Idaho Holding vs. Lewis Clark Bancorp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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