Correlation Between Tectonic Financial and Parke Bancorp
Can any of the company-specific risk be diversified away by investing in both Tectonic Financial and Parke 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 Tectonic Financial and Parke Bancorp 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 Parke Bancorp, you can compare the effects of market volatilities on Tectonic Financial and Parke 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 Tectonic Financial with a short position of Parke Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tectonic Financial and Parke Bancorp.
Diversification Opportunities for Tectonic Financial and Parke Bancorp
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tectonic and Parke is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Financial PR and Parke Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parke Bancorp 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 Parke Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parke Bancorp has no effect on the direction of Tectonic Financial i.e., Tectonic Financial and Parke Bancorp go up and down completely randomly.
Pair Corralation between Tectonic Financial and Parke Bancorp
Assuming the 90 days horizon Tectonic Financial is expected to generate 1.41 times less return on investment than Parke Bancorp. But when comparing it to its historical volatility, Tectonic Financial PR is 1.29 times less risky than Parke Bancorp. It trades about 0.1 of its potential returns per unit of risk. Parke Bancorp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,949 in Parke Bancorp on November 9, 2024 and sell it today you would earn a total of 63.00 from holding Parke Bancorp or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tectonic Financial PR vs. Parke Bancorp
Performance |
| Timeline |
| Tectonic Financial |
| Parke Bancorp |
Tectonic Financial and Parke Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tectonic Financial and Parke Bancorp
The main advantage of trading using opposite Tectonic Financial and Parke Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tectonic Financial position performs unexpectedly, Parke 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 Parke Bancorp will offset losses from the drop in Parke Bancorp's long position.| Tectonic Financial vs. First Guaranty Bancshares | Tectonic Financial vs. First Merchants | Tectonic Financial vs. Associated Banc Corp | Tectonic Financial vs. Bridgewater Bancshares Depositary |
| Parke Bancorp vs. Sound Financial Bancorp | Parke Bancorp vs. Finward Bancorp | Parke Bancorp vs. Franklin Financial Services | Parke Bancorp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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