Correlation Between Texas Community and Affinity Bancshares
Can any of the company-specific risk be diversified away by investing in both Texas Community and Affinity Bancshares 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 Community and Affinity Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Texas Community Bancshares and Affinity Bancshares, you can compare the effects of market volatilities on Texas Community and Affinity Bancshares 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 Community with a short position of Affinity Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Community and Affinity Bancshares.
Diversification Opportunities for Texas Community and Affinity Bancshares
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Texas and Affinity is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Texas Community Bancshares and Affinity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity Bancshares and Texas Community 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 Community Bancshares are associated (or correlated) with Affinity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity Bancshares has no effect on the direction of Texas Community i.e., Texas Community and Affinity Bancshares go up and down completely randomly.
Pair Corralation between Texas Community and Affinity Bancshares
Given the investment horizon of 90 days Texas Community is expected to generate 6.16 times less return on investment than Affinity Bancshares. But when comparing it to its historical volatility, Texas Community Bancshares is 1.33 times less risky than Affinity Bancshares. It trades about 0.01 of its potential returns per unit of risk. Affinity Bancshares is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,124 in Affinity Bancshares on August 28, 2024 and sell it today you would earn a total of 21.00 from holding Affinity Bancshares or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Texas Community Bancshares vs. Affinity Bancshares
Performance |
| Timeline |
| Texas Community Banc |
| Affinity Bancshares |
Texas Community and Affinity Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Texas Community and Affinity Bancshares
The main advantage of trading using opposite Texas Community and Affinity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Community position performs unexpectedly, Affinity Bancshares 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 Affinity Bancshares will offset losses from the drop in Affinity Bancshares' long position.| Texas Community vs. Richmond Mutual Bancorporation | Texas Community vs. LCNB Corporation | Texas Community vs. Prime Meridian Holding | Texas Community vs. William Penn Bancorp |
| Affinity Bancshares vs. Home Federal Bancorp | Affinity Bancshares vs. Magyar Bancorp | Affinity Bancshares vs. Community West Bancshares |
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.
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