Correlation Between Western New and LINKBANCORP
Can any of the company-specific risk be diversified away by investing in both Western New and LINKBANCORP 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 Western New and LINKBANCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western New England and LINKBANCORP, you can compare the effects of market volatilities on Western New and LINKBANCORP 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 Western New with a short position of LINKBANCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western New and LINKBANCORP.
Diversification Opportunities for Western New and LINKBANCORP
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and LINKBANCORP is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Western New England and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP and Western New 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 Western New England are associated (or correlated) with LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of Western New i.e., Western New and LINKBANCORP go up and down completely randomly.
Pair Corralation between Western New and LINKBANCORP
Given the investment horizon of 90 days Western New England is expected to generate 0.94 times more return on investment than LINKBANCORP. However, Western New England is 1.06 times less risky than LINKBANCORP. It trades about 0.09 of its potential returns per unit of risk. LINKBANCORP is currently generating about -0.15 per unit of risk. If you would invest 915.00 in Western New England on November 3, 2024 and sell it today you would earn a total of 25.00 from holding Western New England or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Western New England vs. LINKBANCORP
Performance |
| Timeline |
| Western New England |
| LINKBANCORP |
Western New and LINKBANCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western New and LINKBANCORP
The main advantage of trading using opposite Western New and LINKBANCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western New position performs unexpectedly, LINKBANCORP 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 LINKBANCORP will offset losses from the drop in LINKBANCORP's long position.| Western New vs. US Bancorp | Western New vs. Truist Financial Corp | Western New vs. Fifth Third Bancorp | Western New vs. KeyCorp |
| LINKBANCORP vs. Home Federal Bancorp | LINKBANCORP vs. Lake Shore Bancorp | LINKBANCORP vs. Community West Bancshares | LINKBANCORP 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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