Correlation Between Baraboo Bancorporation and Andover Bancorp

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

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

Diversification Opportunities for Baraboo Bancorporation and Andover Bancorp

-0.43

Correlation Coefficient

Baraboo Bancorporation  Andover Bancorp

Very good diversification

The 3 months correlation between Baraboo and Andover is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Baraboo Bancorp. and Andover Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andover Bancorp and Baraboo Bancorporation 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 Baraboo Bancorporation are associated (or correlated) with Andover Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andover Bancorp has no effect on the direction of Baraboo Bancorporation i.e., Baraboo Bancorporation and Andover Bancorp go up and down completely randomly.

Pair Corralation between Baraboo Bancorporation and Andover Bancorp

Given the investment horizon of 90 days Baraboo Bancorporation is expected to generate 2.38 times more return on investment than Andover Bancorp. However, Baraboo Bancorporation is 2.38 times more volatile than Andover Bancorp. It trades about 0.21 of its potential returns per unit of risk. Andover Bancorp is currently generating about -0.06 per unit of risk. If you would invest  340.00  in Baraboo Bancorporation on December 29, 2024 and sell it today you would earn a total of  50.00  from holding Baraboo Bancorporation or generate 14.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Baraboo Bancorp.  vs.  Andover Bancorp

Baraboo Bancorporation

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baraboo Bancorporation are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Baraboo Bancorporation sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Baraboo Bancorporation and Andover Bancorp

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

The idea behind Baraboo Bancorporation and Andover 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.