Correlation Between Bank of Utica and Bank of Idaho

Can any of the company-specific risk be diversified away by investing in both Bank of Utica and Bank of Idaho 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 Bank of Idaho 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 Bank of Idaho, you can compare the effects of market volatilities on Bank of Utica and Bank of Idaho 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 Bank of Idaho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Utica and Bank of Idaho.

Diversification Opportunities for Bank of Utica and Bank of Idaho

0.68

Correlation Coefficient

Bank of Utica  Bank of Idaho

Poor diversification

The 3 months correlation between Bank and Bank is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Utica and Bank of Idaho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Idaho 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 Bank of Idaho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Idaho has no effect on the direction of Bank of Utica i.e., Bank of Utica and Bank of Idaho go up and down completely randomly.

Pair Corralation between Bank of Utica and Bank of Idaho

Given the investment horizon of 90 days Bank of Utica is expected to generate 6.07 times more return on investment than Bank of Idaho. However, Bank of Utica is 6.07 times more volatile than Bank of Idaho. It trades about 0.03 of its potential returns per unit of risk. Bank of Idaho is currently generating about 0.04 per unit of risk. If you would invest  43,000  in Bank of Utica on September 19, 2024 and sell it today you would earn a total of  11,100  from holding Bank of Utica or generate 25.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	78.23%
Values	Daily Returns

Bank of Utica  vs.  Bank of Idaho

Bank of Utica

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Utica are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bank of Utica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bank of Idaho

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Idaho are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Bank of Idaho may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bank of Utica and Bank of Idaho

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

The idea behind Bank of Utica and Bank of Idaho 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.