Correlation Between American National and APTM Old

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

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

Diversification Opportunities for American National and APTM Old

0.61

Correlation Coefficient

American National  APTM Old

Poor diversification

The 3 months correlation between American and APTM is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding American National Bankshares and APTM Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APTM Old and American National 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 National Bankshares are associated (or correlated) with APTM Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APTM Old has no effect on the direction of American National i.e., American National and APTM Old go up and down completely randomly.

Pair Corralation between American National and APTM Old

If you would invest  1,050  in APTM Old on October 10, 2024 and sell it today you would earn a total of  0.00  from holding APTM Old or generate 0.0% return on investment over 90 days.

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

American National Bankshares  vs.  APTM Old

American National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American National Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, American National is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

APTM Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APTM Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, APTM Old is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with American National and APTM Old

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

The idea behind American National Bankshares and APTM Old 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..