Correlation Between Blackhawk Bancorp and Century Next

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

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

Diversification Opportunities for Blackhawk Bancorp and Century Next

0.62

Correlation Coefficient

Blackhawk Bancorp  Century Next

Poor diversification

The 3 months correlation between Blackhawk and Century is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Blackhawk Bancorp and Century Next Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Next Financial and Blackhawk 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 Blackhawk Bancorp are associated (or correlated) with Century Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Next Financial has no effect on the direction of Blackhawk Bancorp i.e., Blackhawk Bancorp and Century Next go up and down completely randomly.

Pair Corralation between Blackhawk Bancorp and Century Next

Given the investment horizon of 90 days Blackhawk Bancorp is expected to generate 1.27 times less return on investment than Century Next. But when comparing it to its historical volatility, Blackhawk Bancorp is 1.28 times less risky than Century Next. It trades about 0.07 of its potential returns per unit of risk. Century Next Financial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,850  in Century Next Financial on September 2, 2024 and sell it today you would earn a total of  1,025  from holding Century Next Financial or generate 35.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	50.99%
Values	Daily Returns

Blackhawk Bancorp  vs.  Century Next Financial

Blackhawk Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Century Next Financial

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Century Next Financial are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Century Next showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackhawk Bancorp and Century Next

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

The idea behind Blackhawk Bancorp and Century Next Financial 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.