Correlation Between BEO Bancorp and Washington Business

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

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

Diversification Opportunities for BEO Bancorp and Washington Business

0.0

Correlation Coefficient

BEO Bancorp  Washington Business

Pay attention - limited upside

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

Pair Corralation between BEO Bancorp and Washington Business

If you would invest  7,625  in BEO Bancorp on December 20, 2024 and sell it today you would earn a total of  775.00  from holding BEO Bancorp or generate 10.16% return on investment over 90 days.

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

BEO Bancorp  vs.  Washington Business Bank

BEO Bancorp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BEO Bancorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, BEO Bancorp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Washington Business Bank

Risk-Adjusted Performance

Very Weak

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

Pair Trading with BEO Bancorp and Washington Business

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

The idea behind BEO Bancorp and Washington Business Bank 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.