Correlation Between Triumph Financial and Northeast Bancorp
Can any of the company-specific risk be diversified away by investing in both Triumph Financial and Northeast 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 Triumph Financial and Northeast Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triumph Financial and Northeast Bancorp, you can compare the effects of market volatilities on Triumph Financial and Northeast 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 Triumph Financial with a short position of Northeast Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triumph Financial and Northeast Bancorp.
Diversification Opportunities for Triumph Financial and Northeast Bancorp
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Triumph and Northeast is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Triumph Financial and Northeast Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast Bancorp and Triumph 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 Triumph Financial are associated (or correlated) with Northeast Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Bancorp has no effect on the direction of Triumph Financial i.e., Triumph Financial and Northeast Bancorp go up and down completely randomly.
Pair Corralation between Triumph Financial and Northeast Bancorp
Given the investment horizon of 90 days Triumph Financial is expected to generate 1.24 times more return on investment than Northeast Bancorp. However, Triumph Financial is 1.24 times more volatile than Northeast Bancorp. It trades about -0.04 of its potential returns per unit of risk. Northeast Bancorp is currently generating about -0.11 per unit of risk. If you would invest 10,268 in Triumph Financial on September 14, 2024 and sell it today you would lose (212.00) from holding Triumph Financial or give up 2.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Triumph Financial vs. Northeast Bancorp
Performance |
| Timeline |
| Triumph Financial |
| Northeast Bancorp |
Triumph Financial and Northeast Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Triumph Financial and Northeast Bancorp
The main advantage of trading using opposite Triumph Financial and Northeast Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triumph Financial position performs unexpectedly, Northeast 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 Northeast Bancorp will offset losses from the drop in Northeast Bancorp's long position.| Triumph Financial vs. First Capital | Triumph Financial vs. Finward Bancorp | Triumph Financial vs. Community West Bancshares | Triumph Financial vs. QCR Holdings |
| Northeast Bancorp vs. Home Federal Bancorp | Northeast Bancorp vs. Mainstreet Bank | Northeast Bancorp vs. Investar Holding Corp | Northeast Bancorp vs. Magyar 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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