Correlation Between Bar Harbor and Camden National

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

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

Diversification Opportunities for Bar Harbor and Camden National

0.77

Correlation Coefficient

Bar Harbor  Camden National

Poor diversification

The 3 months correlation between Bar and Camden is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bar Harbor Bankshares and Camden National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camden National and Bar Harbor 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 Bar Harbor Bankshares are associated (or correlated) with Camden National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camden National has no effect on the direction of Bar Harbor i.e., Bar Harbor and Camden National go up and down completely randomly.

Pair Corralation between Bar Harbor and Camden National

Considering the 90-day investment horizon Bar Harbor Bankshares is expected to generate 1.35 times more return on investment than Camden National. However, Bar Harbor is 1.35 times more volatile than Camden National. It trades about 0.0 of its potential returns per unit of risk. Camden National is currently generating about -0.03 per unit of risk. If you would invest  3,068  in Bar Harbor Bankshares on December 26, 2024 and sell it today you would lose (23.00) from holding Bar Harbor Bankshares or give up 0.75% of portfolio value over 90 days.

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

Bar Harbor Bankshares  vs.  Camden National

Bar Harbor Bankshares

Risk-Adjusted Performance

Very Weak

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

Camden National

Risk-Adjusted Performance

Very Weak

Over the last 90 days Camden National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Camden National is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bar Harbor and Camden National

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

The idea behind Bar Harbor Bankshares and Camden National 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.