Correlation Between Bank and Plumas Bancorp

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

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

Diversification Opportunities for Bank and Plumas Bancorp

0.0

Correlation Coefficient

Bank  Plumas Bancorp

Pay attention - limited upside

The 3 months correlation between Bank and Plumas is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank and Plumas Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumas Bancorp and Bank 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 are associated (or correlated) with Plumas Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumas Bancorp has no effect on the direction of Bank i.e., Bank and Plumas Bancorp go up and down completely randomly.

Pair Corralation between Bank and Plumas Bancorp

If you would invest (100.00) in Bank on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Bank or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Bank  vs.  Plumas Bancorp

Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Plumas Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Plumas Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Bank and Plumas Bancorp

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

The idea behind Bank and Plumas 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.