Correlation Between Tectonic Financial and Ames National
Can any of the company-specific risk be diversified away by investing in both Tectonic Financial and Ames National 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 Tectonic Financial and Ames National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tectonic Financial PR and Ames National, you can compare the effects of market volatilities on Tectonic Financial and Ames National 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 Tectonic Financial with a short position of Ames National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tectonic Financial and Ames National.
Diversification Opportunities for Tectonic Financial and Ames National
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tectonic and Ames is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Financial PR and Ames National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ames National and Tectonic Financial 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 Tectonic Financial PR are associated (or correlated) with Ames National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ames National has no effect on the direction of Tectonic Financial i.e., Tectonic Financial and Ames National go up and down completely randomly.
Pair Corralation between Tectonic Financial and Ames National
Assuming the 90 days horizon Tectonic Financial is expected to generate 1.82 times less return on investment than Ames National. But when comparing it to its historical volatility, Tectonic Financial PR is 2.03 times less risky than Ames National. It trades about 0.07 of its potential returns per unit of risk. Ames National is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,702 in Ames National on August 28, 2024 and sell it today you would earn a total of 41.00 from holding Ames National or generate 2.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tectonic Financial PR vs. Ames National
Performance |
| Timeline |
| Tectonic Financial |
| Ames National |
Tectonic Financial and Ames National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tectonic Financial and Ames National
The main advantage of trading using opposite Tectonic Financial and Ames National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tectonic Financial position performs unexpectedly, Ames National 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 Ames National will offset losses from the drop in Ames National's long position.| Tectonic Financial vs. First Guaranty Bancshares | Tectonic Financial vs. First Merchants | Tectonic Financial vs. Associated Banc Corp | Tectonic Financial vs. Absa Group Limited |
| Ames National vs. First Community | Ames National vs. Old Point Financial | Ames National vs. Oak Valley Bancorp | Ames National vs. Chemung 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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