Correlation Between Solvay Bank and Federated Premier
Can any of the company-specific risk be diversified away by investing in both Solvay Bank and Federated Premier 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 Federated Premier 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 Federated Premier Municipal, you can compare the effects of market volatilities on Solvay Bank and Federated Premier 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 Federated Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solvay Bank and Federated Premier.
Diversification Opportunities for Solvay Bank and Federated Premier
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Solvay and Federated is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Solvay Bank Corp and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier 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 Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of Solvay Bank i.e., Solvay Bank and Federated Premier go up and down completely randomly.
Pair Corralation between Solvay Bank and Federated Premier
Given the investment horizon of 90 days Solvay Bank Corp is expected to under-perform the Federated Premier. In addition to that, Solvay Bank is 1.66 times more volatile than Federated Premier Municipal. It trades about -0.02 of its total potential returns per unit of risk. Federated Premier Municipal is currently generating about -0.03 per unit of volatility. If you would invest 1,138 in Federated Premier Municipal on September 1, 2024 and sell it today you would lose (5.00) from holding Federated Premier Municipal or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Solvay Bank Corp vs. Federated Premier Municipal
Performance |
| Timeline |
| Solvay Bank Corp |
| Federated Premier |
Solvay Bank and Federated Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solvay Bank and Federated Premier
The main advantage of trading using opposite Solvay Bank and Federated Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solvay Bank position performs unexpectedly, Federated Premier 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 Federated Premier will offset losses from the drop in Federated Premier'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 |
| Federated Premier vs. MFS Investment Grade | Federated Premier vs. Eaton Vance Municipal | Federated Premier vs. DTF Tax Free | Federated Premier vs. Aquagold International |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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