Correlation Between Associated Banc and CullenFrost Bankers

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

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

Diversification Opportunities for Associated Banc and CullenFrost Bankers

0.38

Correlation Coefficient

Associated Banc  CullenFrost Bankers

Weak diversification

The 3 months correlation between Associated and CullenFrost is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Associated Banc Corp and CullenFrost Bankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CullenFrost Bankers and Associated Banc 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 Associated Banc Corp are associated (or correlated) with CullenFrost Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CullenFrost Bankers has no effect on the direction of Associated Banc i.e., Associated Banc and CullenFrost Bankers go up and down completely randomly.

Pair Corralation between Associated Banc and CullenFrost Bankers

Assuming the 90 days trading horizon Associated Banc Corp is expected to generate 0.81 times more return on investment than CullenFrost Bankers. However, Associated Banc Corp is 1.24 times less risky than CullenFrost Bankers. It trades about -0.02 of its potential returns per unit of risk. CullenFrost Bankers is currently generating about -0.13 per unit of risk. If you would invest  2,154  in Associated Banc Corp on October 24, 2024 and sell it today you would lose (29.00) from holding Associated Banc Corp or give up 1.35% of portfolio value over 90 days.

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

Associated Banc Corp  vs.  CullenFrost Bankers

Associated Banc Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Associated Banc Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Associated Banc is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

CullenFrost Bankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CullenFrost Bankers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Associated Banc and CullenFrost Bankers

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

The idea behind Associated Banc Corp and CullenFrost Bankers 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.