Correlation Between Bank of Utica and Blackhawk Bancorp

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

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

Diversification Opportunities for Bank of Utica and Blackhawk Bancorp

0.58

Correlation Coefficient

Bank of Utica  Blackhawk Bancorp

Very weak diversification

The 3 months correlation between Bank and Blackhawk is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Utica and Blackhawk Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackhawk Bancorp and Bank of Utica 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 Bank of Utica are associated (or correlated) with Blackhawk Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackhawk Bancorp has no effect on the direction of Bank of Utica i.e., Bank of Utica and Blackhawk Bancorp go up and down completely randomly.

Pair Corralation between Bank of Utica and Blackhawk Bancorp

If you would invest  41,500  in Bank of Utica on September 2, 2024 and sell it today you would earn a total of  7,300  from holding Bank of Utica or generate 17.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.54%
Values	Daily Returns

Bank of Utica  vs.  Blackhawk Bancorp

Bank of Utica

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Utica are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Bank of Utica unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Bank of Utica and Blackhawk Bancorp

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

The idea behind Bank of Utica and Blackhawk 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.