Correlation Between Ameris Bancorp and National Bank

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

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

Diversification Opportunities for Ameris Bancorp and National Bank

0.92

Correlation Coefficient

Ameris Bancorp  National Bank

Almost no diversification

The 3 months correlation between Ameris and National is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Ameris Bancorp and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings and Ameris 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 Ameris Bancorp are associated (or correlated) with National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of Ameris Bancorp i.e., Ameris Bancorp and National Bank go up and down completely randomly.

Pair Corralation between Ameris Bancorp and National Bank

Given the investment horizon of 90 days Ameris Bancorp is expected to generate 0.99 times more return on investment than National Bank. However, Ameris Bancorp is 1.01 times less risky than National Bank. It trades about 0.09 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.05 per unit of risk. If you would invest  5,021  in Ameris Bancorp on September 29, 2024 and sell it today you would earn a total of  1,284  from holding Ameris Bancorp or generate 25.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Ameris Bancorp  vs.  National Bank Holdings

Ameris Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ameris Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Ameris Bancorp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

National Bank Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, National Bank is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ameris Bancorp and National Bank

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

The idea behind Ameris Bancorp and National Bank Holdings 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.