Correlation Between Tectonic Financial and Renasant
Can any of the company-specific risk be diversified away by investing in both Tectonic Financial and Renasant 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 Renasant 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 Renasant, you can compare the effects of market volatilities on Tectonic Financial and Renasant 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 Renasant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tectonic Financial and Renasant.
Diversification Opportunities for Tectonic Financial and Renasant
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tectonic and Renasant is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Financial PR and Renasant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renasant 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 Renasant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renasant has no effect on the direction of Tectonic Financial i.e., Tectonic Financial and Renasant go up and down completely randomly.
Pair Corralation between Tectonic Financial and Renasant
Assuming the 90 days horizon Tectonic Financial is expected to generate 2.24 times less return on investment than Renasant. But when comparing it to its historical volatility, Tectonic Financial PR is 3.01 times less risky than Renasant. It trades about 0.08 of its potential returns per unit of risk. Renasant is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,095 in Renasant on August 28, 2024 and sell it today you would earn a total of 767.00 from holding Renasant or generate 24.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tectonic Financial PR vs. Renasant
Performance |
| Timeline |
| Tectonic Financial |
| Renasant |
Tectonic Financial and Renasant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tectonic Financial and Renasant
The main advantage of trading using opposite Tectonic Financial and Renasant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tectonic Financial position performs unexpectedly, Renasant 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 Renasant will offset losses from the drop in Renasant'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 |
| Renasant vs. Simmons First National | Renasant vs. Trustmark | Renasant vs. Sandy Spring Bancorp | Renasant vs. Stock Yards Bancorp |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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