Correlation Between TrustCo Bank and Bankwell Financial
Can any of the company-specific risk be diversified away by investing in both TrustCo Bank and Bankwell Financial 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 TrustCo Bank and Bankwell Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TrustCo Bank Corp and Bankwell Financial Group, you can compare the effects of market volatilities on TrustCo Bank and Bankwell Financial 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 TrustCo Bank with a short position of Bankwell Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of TrustCo Bank and Bankwell Financial.
Diversification Opportunities for TrustCo Bank and Bankwell Financial
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TrustCo and Bankwell is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding TrustCo Bank Corp and Bankwell Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankwell Financial and TrustCo Bank 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 TrustCo Bank Corp are associated (or correlated) with Bankwell Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankwell Financial has no effect on the direction of TrustCo Bank i.e., TrustCo Bank and Bankwell Financial go up and down completely randomly.
Pair Corralation between TrustCo Bank and Bankwell Financial
Given the investment horizon of 90 days TrustCo Bank Corp is expected to generate 0.93 times more return on investment than Bankwell Financial. However, TrustCo Bank Corp is 1.08 times less risky than Bankwell Financial. It trades about 0.1 of its potential returns per unit of risk. Bankwell Financial Group is currently generating about 0.06 per unit of risk. If you would invest 3,216 in TrustCo Bank Corp on September 12, 2024 and sell it today you would earn a total of 445.00 from holding TrustCo Bank Corp or generate 13.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TrustCo Bank Corp vs. Bankwell Financial Group
Performance |
| Timeline |
| TrustCo Bank Corp |
| Bankwell Financial |
TrustCo Bank and Bankwell Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TrustCo Bank and Bankwell Financial
The main advantage of trading using opposite TrustCo Bank and Bankwell Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TrustCo Bank position performs unexpectedly, Bankwell Financial 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 Bankwell Financial will offset losses from the drop in Bankwell Financial's long position.| TrustCo Bank vs. Southern Missouri Bancorp | TrustCo Bank vs. IF Bancorp | TrustCo Bank vs. Colony Bankcorp | TrustCo Bank vs. Old Point Financial |
| Bankwell Financial vs. Franklin Financial Services | Bankwell Financial vs. The First Bancshares, | Bankwell Financial vs. Home Federal Bancorp | Bankwell Financial vs. Lake Shore 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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