Correlation Between EBEST Investment and BNK Financial

Can any of the company-specific risk be diversified away by investing in both EBEST Investment and BNK 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 EBEST Investment and BNK Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EBEST Investment Securities and BNK Financial Group, you can compare the effects of market volatilities on EBEST Investment and BNK 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 EBEST Investment with a short position of BNK Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBEST Investment and BNK Financial.

Diversification Opportunities for EBEST Investment and BNK Financial

-0.74

Correlation Coefficient

EBEST Investment  BNK Financial

Pay attention - limited upside

The 3 months correlation between EBEST and BNK is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding EBEST Investment Securities and BNK Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNK Financial Group and EBEST Investment 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 EBEST Investment Securities are associated (or correlated) with BNK Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNK Financial Group has no effect on the direction of EBEST Investment i.e., EBEST Investment and BNK Financial go up and down completely randomly.

Pair Corralation between EBEST Investment and BNK Financial

Assuming the 90 days trading horizon EBEST Investment Securities is expected to generate 1.01 times more return on investment than BNK Financial. However, EBEST Investment is 1.01 times more volatile than BNK Financial Group. It trades about 0.1 of its potential returns per unit of risk. BNK Financial Group is currently generating about -0.09 per unit of risk. If you would invest  365,000  in EBEST Investment Securities on October 8, 2024 and sell it today you would earn a total of  10,000  from holding EBEST Investment Securities or generate 2.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

EBEST Investment Securities  vs.  BNK Financial Group

EBEST Investment Sec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EBEST Investment Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

BNK Financial Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BNK Financial Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BNK Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EBEST Investment and BNK Financial

The main advantage of trading using opposite EBEST Investment and BNK Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBEST Investment position performs unexpectedly, BNK 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 BNK Financial will offset losses from the drop in BNK Financial's long position.

The idea behind EBEST Investment Securities and BNK Financial Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.