Correlation Between Ames National and Cincinnati Bancorp

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

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

Diversification Opportunities for Ames National and Cincinnati Bancorp

0.0

Correlation Coefficient

Ames National  Cincinnati Bancorp

Pay attention - limited upside

The 3 months correlation between Ames and Cincinnati is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ames National and Cincinnati Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Bancorp and Ames 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 Ames National are associated (or correlated) with Cincinnati Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Bancorp has no effect on the direction of Ames National i.e., Ames National and Cincinnati Bancorp go up and down completely randomly.

Pair Corralation between Ames National and Cincinnati Bancorp

If you would invest  1,625  in Ames National on December 29, 2024 and sell it today you would earn a total of  146.00  from holding Ames National or generate 8.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Ames National  vs.  Cincinnati Bancorp

Ames National

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ames National are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Ames National may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cincinnati Bancorp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ames National and Cincinnati Bancorp

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

The idea behind Ames National and Cincinnati Bancorp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.