Correlation Between Westbury Bancorp and Merchants Bancorp
Can any of the company-specific risk be diversified away by investing in both Westbury Bancorp and Merchants 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 Westbury Bancorp and Merchants Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westbury Bancorp and Merchants Bancorp, you can compare the effects of market volatilities on Westbury Bancorp and Merchants 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 Westbury Bancorp with a short position of Merchants Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westbury Bancorp and Merchants Bancorp.
Diversification Opportunities for Westbury Bancorp and Merchants Bancorp
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westbury and Merchants is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Westbury Bancorp and Merchants Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants Bancorp and Westbury Bancorp 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 Westbury Bancorp are associated (or correlated) with Merchants Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants Bancorp has no effect on the direction of Westbury Bancorp i.e., Westbury Bancorp and Merchants Bancorp go up and down completely randomly.
Pair Corralation between Westbury Bancorp and Merchants Bancorp
If you would invest 2,586 in Merchants Bancorp on August 29, 2024 and sell it today you would earn a total of 22.00 from holding Merchants Bancorp or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Westbury Bancorp vs. Merchants Bancorp
Performance |
| Timeline |
| Westbury Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Merchants Bancorp |
Westbury Bancorp and Merchants Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westbury Bancorp and Merchants Bancorp
The main advantage of trading using opposite Westbury Bancorp and Merchants Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westbury Bancorp position performs unexpectedly, Merchants 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 Merchants Bancorp will offset losses from the drop in Merchants Bancorp's long position.| Westbury Bancorp vs. Home Federal Bancorp | Westbury Bancorp vs. First Northwest Bancorp | Westbury Bancorp vs. First Community | Westbury Bancorp vs. Oak Valley Bancorp |
| Merchants Bancorp vs. Merchants Bancorp | Merchants Bancorp vs. Midland States Bancorp | Merchants Bancorp vs. Merchants 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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