Correlation Between Woodlands Financial and Truxton
Can any of the company-specific risk be diversified away by investing in both Woodlands Financial and Truxton 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 Truxton 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 Truxton, you can compare the effects of market volatilities on Woodlands Financial and Truxton 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 Truxton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodlands Financial and Truxton.
Diversification Opportunities for Woodlands Financial and Truxton
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Woodlands and Truxton is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Woodlands Financial Services and Truxton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truxton 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 Truxton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truxton has no effect on the direction of Woodlands Financial i.e., Woodlands Financial and Truxton go up and down completely randomly.
Pair Corralation between Woodlands Financial and Truxton
Given the investment horizon of 90 days Woodlands Financial Services is expected to under-perform the Truxton. In addition to that, Woodlands Financial is 2.2 times more volatile than Truxton. It trades about -0.09 of its total potential returns per unit of risk. Truxton is currently generating about 0.2 per unit of volatility. If you would invest 7,118 in Truxton on August 30, 2024 and sell it today you would earn a total of 237.00 from holding Truxton or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woodlands Financial Services vs. Truxton
Performance |
| Timeline |
| Woodlands Financial |
| Truxton |
Woodlands Financial and Truxton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woodlands Financial and Truxton
The main advantage of trading using opposite Woodlands Financial and Truxton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodlands Financial position performs unexpectedly, Truxton 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 Truxton will offset losses from the drop in Truxton'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 |
| Truxton vs. Southern Michigan Bancorp | Truxton vs. Heartland Banccorp | Truxton vs. Woodlands Financial Services | Truxton vs. Exchange Bank |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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