Correlation Between Summit Bank and Exchange Bankshares
Can any of the company-specific risk be diversified away by investing in both Summit Bank and Exchange Bankshares 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 Exchange Bankshares 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 Exchange Bankshares, you can compare the effects of market volatilities on Summit Bank and Exchange Bankshares 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 Exchange Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Bank and Exchange Bankshares.
Diversification Opportunities for Summit Bank and Exchange Bankshares
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and Exchange is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Summit Bank Group and Exchange Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Bankshares 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 Exchange Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Bankshares has no effect on the direction of Summit Bank i.e., Summit Bank and Exchange Bankshares go up and down completely randomly.
Pair Corralation between Summit Bank and Exchange Bankshares
Given the investment horizon of 90 days Summit Bank is expected to generate 1.01 times less return on investment than Exchange Bankshares. In addition to that, Summit Bank is 5.67 times more volatile than Exchange Bankshares. It trades about 0.05 of its total potential returns per unit of risk. Exchange Bankshares is currently generating about 0.3 per unit of volatility. If you would invest 4,501 in Exchange Bankshares on October 9, 2024 and sell it today you would earn a total of 289.00 from holding Exchange Bankshares or generate 6.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Bank Group vs. Exchange Bankshares
Performance |
| Timeline |
| Summit Bank Group |
| Exchange Bankshares |
Summit Bank and Exchange Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Bank and Exchange Bankshares
The main advantage of trading using opposite Summit Bank and Exchange Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Bank position performs unexpectedly, Exchange Bankshares 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 Exchange Bankshares will offset losses from the drop in Exchange Bankshares' long position.| Summit Bank vs. Savi Financial | Summit Bank vs. Pacific West Bancorp | Summit Bank vs. Commencement Bancorp | Summit Bank vs. Merchants Marine Bancorp |
| Exchange Bankshares vs. First Community Financial | Exchange Bankshares vs. National Capital Bank | Exchange Bankshares vs. Oakworth Capital | Exchange Bankshares vs. Truxton |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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