Correlation Between Andover Bancorp and First Bankers

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

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

Diversification Opportunities for Andover Bancorp and First Bankers

0.23

Correlation Coefficient

Andover Bancorp  First Bankers

Modest diversification

The 3 months correlation between Andover and First is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Andover Bancorp and First Bankers Trustshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bankers Trustshares and Andover Bancorp 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 Andover Bancorp are associated (or correlated) with First Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bankers Trustshares has no effect on the direction of Andover Bancorp i.e., Andover Bancorp and First Bankers go up and down completely randomly.

Pair Corralation between Andover Bancorp and First Bankers

Given the investment horizon of 90 days Andover Bancorp is expected to under-perform the First Bankers. But the pink sheet apears to be less risky and, when comparing its historical volatility, Andover Bancorp is 1.55 times less risky than First Bankers. The pink sheet trades about -0.07 of its potential returns per unit of risk. The First Bankers Trustshares is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,629  in First Bankers Trustshares on December 21, 2024 and sell it today you would earn a total of  10.00  from holding First Bankers Trustshares or generate 0.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.53%
Values	Daily Returns

Andover Bancorp  vs.  First Bankers Trustshares

Andover Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Andover Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Andover Bancorp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

First Bankers Trustshares

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Bankers Trustshares are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, First Bankers 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 Andover Bancorp and First Bankers

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

The idea behind Andover Bancorp and First Bankers Trustshares 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.