Correlation Between Bancorp and Melexis NV
Can any of the company-specific risk be diversified away by investing in both Bancorp and Melexis NV 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 Bancorp and Melexis NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Bancorp and Melexis NV, you can compare the effects of market volatilities on Bancorp and Melexis NV 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 Bancorp with a short position of Melexis NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bancorp and Melexis NV.
Diversification Opportunities for Bancorp and Melexis NV
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bancorp and Melexis is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding The Bancorp and Melexis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melexis NV and Bancorp 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 The Bancorp are associated (or correlated) with Melexis NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melexis NV has no effect on the direction of Bancorp i.e., Bancorp and Melexis NV go up and down completely randomly.
Pair Corralation between Bancorp and Melexis NV
Given the investment horizon of 90 days The Bancorp is expected to generate 1.07 times more return on investment than Melexis NV. However, Bancorp is 1.07 times more volatile than Melexis NV. It trades about 0.17 of its potential returns per unit of risk. Melexis NV is currently generating about -0.08 per unit of risk. If you would invest 3,278 in The Bancorp on September 1, 2024 and sell it today you would earn a total of 2,565 from holding The Bancorp or generate 78.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
The Bancorp vs. Melexis NV
Performance |
| Timeline |
| Bancorp |
| Melexis NV |
Bancorp and Melexis NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bancorp and Melexis NV
The main advantage of trading using opposite Bancorp and Melexis NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bancorp position performs unexpectedly, Melexis NV 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 Melexis NV will offset losses from the drop in Melexis NV's long position.| Bancorp vs. Heartland Financial USA | Bancorp vs. Heritage Commerce Corp | Bancorp vs. Business First Bancshares | Bancorp vs. German American Bancorp |
| Melexis NV vs. Power Integrations | Melexis NV vs. MACOM Technology Solutions | Melexis NV vs. Intchains Group Limited | Melexis NV vs. Vishay Intertechnology |
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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