Correlation Between TriCo Bancshares and China Merchants
Can any of the company-specific risk be diversified away by investing in both TriCo Bancshares and China Merchants 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 TriCo Bancshares and China Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TriCo Bancshares and China Merchants Bank, you can compare the effects of market volatilities on TriCo Bancshares and China Merchants 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 TriCo Bancshares with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of TriCo Bancshares and China Merchants.
Diversification Opportunities for TriCo Bancshares and China Merchants
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TriCo and China is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding TriCo Bancshares and China Merchants Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Bank and TriCo 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 TriCo Bancshares are associated (or correlated) with China Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Merchants Bank has no effect on the direction of TriCo Bancshares i.e., TriCo Bancshares and China Merchants go up and down completely randomly.
Pair Corralation between TriCo Bancshares and China Merchants
Given the investment horizon of 90 days TriCo Bancshares is expected to generate 6.24 times less return on investment than China Merchants. But when comparing it to its historical volatility, TriCo Bancshares is 1.27 times less risky than China Merchants. It trades about 0.06 of its potential returns per unit of risk. China Merchants Bank is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,489 in China Merchants Bank on November 4, 2024 and sell it today you would earn a total of 256.00 from holding China Merchants Bank or generate 10.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TriCo Bancshares vs. China Merchants Bank
Performance |
| Timeline |
| TriCo Bancshares |
| China Merchants Bank |
TriCo Bancshares and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TriCo Bancshares and China Merchants
The main advantage of trading using opposite TriCo Bancshares and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TriCo Bancshares position performs unexpectedly, China Merchants 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 China Merchants will offset losses from the drop in China Merchants' long position.| TriCo Bancshares vs. First Northwest Bancorp | TriCo Bancshares vs. Community West Bancshares | TriCo Bancshares vs. First Financial Northwest | TriCo Bancshares vs. Great Southern Bancorp |
| China Merchants vs. Banco De Chile | China Merchants vs. Banco Santander Brasil | China Merchants vs. CrossFirst Bankshares | China Merchants vs. Banco Bradesco SA |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Positions Ratings 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 | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |