Correlation Between Texas Capital and Brookline Bancorp
Can any of the company-specific risk be diversified away by investing in both Texas Capital and Brookline Bancorp 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 Texas Capital and Brookline Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Texas Capital Bancshares and Brookline Bancorp, you can compare the effects of market volatilities on Texas Capital and Brookline Bancorp 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 Texas Capital with a short position of Brookline Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Capital and Brookline Bancorp.
Diversification Opportunities for Texas Capital and Brookline Bancorp
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Texas and Brookline is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Texas Capital Bancshares and Brookline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookline Bancorp and Texas Capital 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 Texas Capital Bancshares are associated (or correlated) with Brookline Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookline Bancorp has no effect on the direction of Texas Capital i.e., Texas Capital and Brookline Bancorp go up and down completely randomly.
Pair Corralation between Texas Capital and Brookline Bancorp
Assuming the 90 days horizon Texas Capital is expected to generate 1.72 times less return on investment than Brookline Bancorp. But when comparing it to its historical volatility, Texas Capital Bancshares is 1.63 times less risky than Brookline Bancorp. It trades about 0.06 of its potential returns per unit of risk. Brookline Bancorp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 907.00 in Brookline Bancorp on September 14, 2024 and sell it today you would earn a total of 349.00 from holding Brookline Bancorp or generate 38.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Texas Capital Bancshares vs. Brookline Bancorp
Performance |
| Timeline |
| Texas Capital Bancshares |
| Brookline Bancorp |
Texas Capital and Brookline Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Texas Capital and Brookline Bancorp
The main advantage of trading using opposite Texas Capital and Brookline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Capital position performs unexpectedly, Brookline Bancorp 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 Brookline Bancorp will offset losses from the drop in Brookline Bancorp's long position.| Texas Capital vs. Capital One Financial | Texas Capital vs. Capital One Financial | Texas Capital vs. Bank of America |
| Brookline Bancorp vs. Heritage Commerce Corp | Brookline Bancorp vs. Eastern Bankshares | Brookline Bancorp vs. HarborOne Bancorp | Brookline Bancorp vs. Kearny Financial 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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