Correlation Between American Business and Communities First

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

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

Diversification Opportunities for American Business and Communities First

0.19

Correlation Coefficient

American Business  Communities First

Average diversification

The 3 months correlation between American and Communities is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding American Business Bk and Communities First Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Communities First and American Business 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 American Business Bk are associated (or correlated) with Communities First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Communities First has no effect on the direction of American Business i.e., American Business and Communities First go up and down completely randomly.

Pair Corralation between American Business and Communities First

If you would invest  3,490  in American Business Bk on September 12, 2024 and sell it today you would earn a total of  924.00  from holding American Business Bk or generate 26.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

American Business Bk  vs.  Communities First Financial

American Business

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in American Business Bk are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, American Business showed solid returns over the last few months and may actually be approaching a breakup point.

Communities First

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Communities First Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Communities First is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with American Business and Communities First

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

The idea behind American Business Bk and Communities First 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.

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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..