Correlation Between Bank of Idaho and Lewis Clark

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

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

Diversification Opportunities for Bank of Idaho and Lewis Clark

0.62

Correlation Coefficient

Bank of Idaho  Lewis Clark

Poor diversification

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

Pair Corralation between Bank of Idaho and Lewis Clark

Given the investment horizon of 90 days Bank of Idaho is expected to generate 1.61 times less return on investment than Lewis Clark. But when comparing it to its historical volatility, Bank of Idaho is 1.97 times less risky than Lewis Clark. It trades about 0.19 of its potential returns per unit of risk. Lewis Clark Bancorp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,105  in Lewis Clark Bancorp on October 12, 2024 and sell it today you would earn a total of  900.00  from holding Lewis Clark Bancorp or generate 42.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.94%
Values	Daily Returns

Bank of Idaho  vs.  Lewis Clark Bancorp

Bank of Idaho

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Idaho are ranked lower than 15 (%) 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 February 2025.

Lewis Clark Bancorp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lewis Clark Bancorp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, Lewis Clark may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bank of Idaho and Lewis Clark

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

The idea behind Bank of Idaho and Lewis Clark 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.