Correlation Between Avidbank Holdings and Heartland Banccorp

Can any of the company-specific risk be diversified away by investing in both Avidbank Holdings and Heartland Banccorp 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 Avidbank Holdings and Heartland Banccorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Avidbank Holdings and Heartland Banccorp

0.08

Correlation Coefficient

Avidbank Holdings  Heartland Banccorp

Significant diversification

The 3 months correlation between Avidbank and Heartland is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Avidbank Holdings and Heartland Banccorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Banccorp and Avidbank Holdings 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 Avidbank Holdings are associated (or correlated) with Heartland Banccorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Banccorp has no effect on the direction of Avidbank Holdings i.e., Avidbank Holdings and Heartland Banccorp go up and down completely randomly.

Pair Corralation between Avidbank Holdings and Heartland Banccorp

Given the investment horizon of 90 days Avidbank Holdings is expected to generate 2.45 times less return on investment than Heartland Banccorp. In addition to that, Avidbank Holdings is 1.16 times more volatile than Heartland Banccorp. It trades about 0.04 of its total potential returns per unit of risk. Heartland Banccorp is currently generating about 0.12 per unit of volatility. If you would invest  15,327  in Heartland Banccorp on December 30, 2024 and sell it today you would earn a total of  673.00  from holding Heartland Banccorp or generate 4.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	38.71%
Values	Daily Returns

Avidbank Holdings  vs.  Heartland Banccorp

Avidbank Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avidbank Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Avidbank Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Heartland Banccorp

Risk-Adjusted Performance

OK

Over the last 90 days Heartland Banccorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very fragile basic indicators, Heartland Banccorp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Avidbank Holdings and Heartland Banccorp

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

The idea behind Avidbank Holdings and Heartland Banccorp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.