Correlation Between Tectonic Financial and Texas Capital
Can any of the company-specific risk be diversified away by investing in both Tectonic Financial and Texas Capital 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 Texas Capital 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 Texas Capital Bancshares, you can compare the effects of market volatilities on Tectonic Financial and Texas Capital 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 Texas Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tectonic Financial and Texas Capital.
Diversification Opportunities for Tectonic Financial and Texas Capital
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tectonic and Texas is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Financial PR and Texas Capital Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital Bancshares 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 Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Bancshares has no effect on the direction of Tectonic Financial i.e., Tectonic Financial and Texas Capital go up and down completely randomly.
Pair Corralation between Tectonic Financial and Texas Capital
Assuming the 90 days horizon Tectonic Financial PR is expected to generate 0.61 times more return on investment than Texas Capital. However, Tectonic Financial PR is 1.64 times less risky than Texas Capital. It trades about 0.07 of its potential returns per unit of risk. Texas Capital Bancshares is currently generating about -0.08 per unit of risk. If you would invest 1,031 in Tectonic Financial PR on September 14, 2024 and sell it today you would earn a total of 11.00 from holding Tectonic Financial PR or generate 1.07% 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. Texas Capital Bancshares
Performance |
| Timeline |
| Tectonic Financial |
| Texas Capital Bancshares |
Tectonic Financial and Texas Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tectonic Financial and Texas Capital
The main advantage of trading using opposite Tectonic Financial and Texas Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tectonic Financial position performs unexpectedly, Texas Capital 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 Texas Capital will offset losses from the drop in Texas Capital'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 |
| Texas Capital vs. Capital One Financial | Texas Capital vs. Capital One Financial | Texas Capital vs. Bank of America |
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 Positions Ratings module to 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.
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