Correlation Between Affinity Bancshares and Generations Bancorp

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

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

Diversification Opportunities for Affinity Bancshares and Generations Bancorp

0.65

Correlation Coefficient

Affinity Bancshares  Generations Bancorp

Poor diversification

The 3 months correlation between Affinity and Generations is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Affinity Bancshares and Generations Bancorp NY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generations Bancorp and Affinity Bancshares 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 Affinity Bancshares are associated (or correlated) with Generations Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generations Bancorp has no effect on the direction of Affinity Bancshares i.e., Affinity Bancshares and Generations Bancorp go up and down completely randomly.

Pair Corralation between Affinity Bancshares and Generations Bancorp

Given the investment horizon of 90 days Affinity Bancshares is expected to generate 0.97 times more return on investment than Generations Bancorp. However, Affinity Bancshares is 1.04 times less risky than Generations Bancorp. It trades about 0.1 of its potential returns per unit of risk. Generations Bancorp NY is currently generating about -0.25 per unit of risk. If you would invest  2,155  in Affinity Bancshares on September 24, 2024 and sell it today you would earn a total of  94.00  from holding Affinity Bancshares or generate 4.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	16.92%
Values	Daily Returns

Affinity Bancshares  vs.  Generations Bancorp NY

Affinity Bancshares

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Affinity Bancshares are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Affinity Bancshares is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Generations Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Generations Bancorp NY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Affinity Bancshares and Generations Bancorp

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

The idea behind Affinity Bancshares and Generations Bancorp NY 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..