Correlation Between Auburn Bancorp and VWF Bancorp

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

By analyzing existing cross correlation between Auburn Bancorp and VWF Bancorp, you can compare the effects of market volatilities on Auburn Bancorp and VWF 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 Auburn Bancorp with a short position of VWF Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auburn Bancorp and VWF Bancorp.

Diversification Opportunities for Auburn Bancorp and VWF Bancorp

-0.23

Correlation Coefficient

Auburn Bancorp  VWF Bancorp

Very good diversification

The 3 months correlation between Auburn and VWF is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Auburn Bancorp and VWF Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VWF Bancorp and Auburn 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 Auburn Bancorp are associated (or correlated) with VWF Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VWF Bancorp has no effect on the direction of Auburn Bancorp i.e., Auburn Bancorp and VWF Bancorp go up and down completely randomly.

Pair Corralation between Auburn Bancorp and VWF Bancorp

Given the investment horizon of 90 days Auburn Bancorp is expected to generate 1.72 times more return on investment than VWF Bancorp. However, Auburn Bancorp is 1.72 times more volatile than VWF Bancorp. It trades about 0.01 of its potential returns per unit of risk. VWF Bancorp is currently generating about -0.17 per unit of risk. If you would invest  900.00  in Auburn Bancorp on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Auburn Bancorp or generate 0.0% return on investment over 90 days.

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

Auburn Bancorp  vs.  VWF Bancorp

Auburn Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Auburn Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Auburn Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

VWF Bancorp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Auburn Bancorp and VWF Bancorp

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

The idea behind Auburn Bancorp and VWF Bancorp 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 Global Correlations module to find global opportunities by holding instruments from different markets.