Correlation Between Solvay Bank and F M
Can any of the company-specific risk be diversified away by investing in both Solvay Bank and F M 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 Solvay Bank and F M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solvay Bank Corp and F M Bank, you can compare the effects of market volatilities on Solvay Bank and F M 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 Solvay Bank with a short position of F M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solvay Bank and F M.
Diversification Opportunities for Solvay Bank and F M
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Solvay and FMBM is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Solvay Bank Corp and F M Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F M Bank and Solvay 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 Solvay Bank Corp are associated (or correlated) with F M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F M Bank has no effect on the direction of Solvay Bank i.e., Solvay Bank and F M go up and down completely randomly.
Pair Corralation between Solvay Bank and F M
Given the investment horizon of 90 days Solvay Bank Corp is expected to generate 1.0 times more return on investment than F M. However, Solvay Bank Corp is 1.0 times less risky than F M. It trades about -0.11 of its potential returns per unit of risk. F M Bank is currently generating about -0.3 per unit of risk. If you would invest 2,893 in Solvay Bank Corp on August 25, 2024 and sell it today you would lose (79.00) from holding Solvay Bank Corp or give up 2.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solvay Bank Corp vs. F M Bank
Performance |
| Timeline |
| Solvay Bank Corp |
| F M Bank |
Solvay Bank and F M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solvay Bank and F M
The main advantage of trading using opposite Solvay Bank and F M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solvay Bank position performs unexpectedly, F M 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 F M will offset losses from the drop in F M's long position.| Solvay Bank vs. Southern Michigan Bancorp | Solvay Bank vs. Summit Bancshares | Solvay Bank vs. Tri County Financial Group | Solvay Bank vs. QNB Corp |
| F M vs. Invesco High Income | F M vs. Blackrock Muniholdings Ny | F M vs. MFS Investment Grade | F M vs. Federated Premier Municipal |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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