Correlation Between Alerus Financial and LINKBANCORP

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

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

Diversification Opportunities for Alerus Financial and LINKBANCORP

-0.56

Correlation Coefficient

Alerus Financial  LINKBANCORP

Excellent diversification

The 3 months correlation between Alerus and LINKBANCORP is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Alerus Financial Corp and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP and Alerus Financial 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 Alerus Financial Corp are associated (or correlated) with LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of Alerus Financial i.e., Alerus Financial and LINKBANCORP go up and down completely randomly.

Pair Corralation between Alerus Financial and LINKBANCORP

Given the investment horizon of 90 days Alerus Financial Corp is expected to under-perform the LINKBANCORP. But the stock apears to be less risky and, when comparing its historical volatility, Alerus Financial Corp is 1.03 times less risky than LINKBANCORP. The stock trades about -0.02 of its potential returns per unit of risk. The LINKBANCORP is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  652.00  in LINKBANCORP on October 7, 2024 and sell it today you would earn a total of  104.00  from holding LINKBANCORP or generate 15.95% return on investment over 90 days.

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

Alerus Financial Corp  vs.  LINKBANCORP

Alerus Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alerus Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

LINKBANCORP

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LINKBANCORP are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting forward-looking signals, LINKBANCORP sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alerus Financial and LINKBANCORP

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

The idea behind Alerus Financial Corp and LINKBANCORP 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.