Correlation Between Woodlands Financial and Main Street
Can any of the company-specific risk be diversified away by investing in both Woodlands Financial and Main Street 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 Woodlands Financial and Main Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woodlands Financial Services and Main Street Financial, you can compare the effects of market volatilities on Woodlands Financial and Main Street 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 Woodlands Financial with a short position of Main Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodlands Financial and Main Street.
Diversification Opportunities for Woodlands Financial and Main Street
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Woodlands and Main is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Woodlands Financial Services and Main Street Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Street Financial and Woodlands 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 Woodlands Financial Services are associated (or correlated) with Main Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Street Financial has no effect on the direction of Woodlands Financial i.e., Woodlands Financial and Main Street go up and down completely randomly.
Pair Corralation between Woodlands Financial and Main Street
Given the investment horizon of 90 days Woodlands Financial Services is expected to generate 1.93 times more return on investment than Main Street. However, Woodlands Financial is 1.93 times more volatile than Main Street Financial. It trades about 0.01 of its potential returns per unit of risk. Main Street Financial is currently generating about 0.01 per unit of risk. If you would invest 2,700 in Woodlands Financial Services on August 26, 2024 and sell it today you would lose (667.00) from holding Woodlands Financial Services or give up 24.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 79.48% |
| Values | Daily Returns |
Woodlands Financial Services vs. Main Street Financial
Performance |
| Timeline |
| Woodlands Financial |
| Main Street Financial |
Woodlands Financial and Main Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woodlands Financial and Main Street
The main advantage of trading using opposite Woodlands Financial and Main Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodlands Financial position performs unexpectedly, Main Street 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 Main Street will offset losses from the drop in Main Street's long position.| Woodlands Financial vs. Eastern Michigan Financial | Woodlands Financial vs. Commercial National Financial | Woodlands Financial vs. Mifflinburg Bancorp | Woodlands Financial vs. Apollo Bancorp |
| Main Street vs. CCFNB Bancorp | Main Street vs. Burke Herbert Financial | Main Street vs. First IC | Main Street vs. Enterprise Financial Services |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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