Correlation Between Affinity Bancshares and Peapack Gladstone

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

By analyzing existing cross correlation between Affinity Bancshares and Peapack Gladstone Financial, you can compare the effects of market volatilities on Affinity Bancshares and Peapack Gladstone 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 Peapack Gladstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affinity Bancshares and Peapack Gladstone.

Diversification Opportunities for Affinity Bancshares and Peapack Gladstone

-0.1

Correlation Coefficient

Affinity Bancshares  Peapack Gladstone

Good diversification

The 3 months correlation between Affinity and Peapack is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Affinity Bancshares and Peapack Gladstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peapack Gladstone 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 Peapack Gladstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peapack Gladstone has no effect on the direction of Affinity Bancshares i.e., Affinity Bancshares and Peapack Gladstone go up and down completely randomly.

Pair Corralation between Affinity Bancshares and Peapack Gladstone

Given the investment horizon of 90 days Affinity Bancshares is expected to generate 1.45 times more return on investment than Peapack Gladstone. However, Affinity Bancshares is 1.45 times more volatile than Peapack Gladstone Financial. It trades about -0.06 of its potential returns per unit of risk. Peapack Gladstone Financial is currently generating about -0.09 per unit of risk. If you would invest  2,016  in Affinity Bancshares on December 29, 2024 and sell it today you would lose (238.00) from holding Affinity Bancshares or give up 11.81% of portfolio value over 90 days.

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

Affinity Bancshares  vs.  Peapack Gladstone Financial

Affinity Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Affinity Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Peapack Gladstone

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peapack Gladstone Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Affinity Bancshares and Peapack Gladstone

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

The idea behind Affinity Bancshares and Peapack Gladstone Financial 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.

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 .