Correlation Between Summit Bancshares and Community Bankers
Can any of the company-specific risk be diversified away by investing in both Summit Bancshares and Community Bankers 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 Bancshares and Community Bankers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Bancshares and Community Bankers, you can compare the effects of market volatilities on Summit Bancshares and Community Bankers 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 Bancshares with a short position of Community Bankers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Bancshares and Community Bankers.
Diversification Opportunities for Summit Bancshares and Community Bankers
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Summit and Community is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Summit Bancshares and Community Bankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Bankers and Summit 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 Summit Bancshares are associated (or correlated) with Community Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Bankers has no effect on the direction of Summit Bancshares i.e., Summit Bancshares and Community Bankers go up and down completely randomly.
Pair Corralation between Summit Bancshares and Community Bankers
Given the investment horizon of 90 days Summit Bancshares is expected to under-perform the Community Bankers. But the pink sheet apears to be less risky and, when comparing its historical volatility, Summit Bancshares is 1.17 times less risky than Community Bankers. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Community Bankers is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 600.00 in Community Bankers on November 27, 2024 and sell it today you would lose (2.00) from holding Community Bankers or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Bancshares vs. Community Bankers
Performance |
| Timeline |
| Summit Bancshares |
| Community Bankers |
Summit Bancshares and Community Bankers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Bancshares and Community Bankers
The main advantage of trading using opposite Summit Bancshares and Community Bankers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Bancshares position performs unexpectedly, Community Bankers 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 Community Bankers will offset losses from the drop in Community Bankers' long position.| Summit Bancshares vs. Pioneer Bankcorp | Summit Bancshares vs. Liberty Northwest Bancorp | Summit Bancshares vs. First Community | Summit Bancshares vs. Coeur dAlene Bancorp |
| Community Bankers vs. The Farmers Bank | Community Bankers vs. CCSB Financial Corp | Community Bankers vs. Bank of Utica | Community Bankers vs. Delhi Bank Corp |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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