Correlation Between Carter Bank and LINKBANCORP

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

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

Diversification Opportunities for Carter Bank and LINKBANCORP

0.63

Correlation Coefficient

Carter Bank  LINKBANCORP

Poor diversification

The 3 months correlation between Carter and LINKBANCORP is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Carter Bank and and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP and Carter 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 Carter Bank and are associated (or correlated) with LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of Carter Bank i.e., Carter Bank and LINKBANCORP go up and down completely randomly.

Pair Corralation between Carter Bank and LINKBANCORP

Given the investment horizon of 90 days Carter Bank and is expected to generate 0.85 times more return on investment than LINKBANCORP. However, Carter Bank and is 1.18 times less risky than LINKBANCORP. It trades about -0.07 of its potential returns per unit of risk. LINKBANCORP is currently generating about -0.07 per unit of risk. If you would invest  1,760  in Carter Bank and on December 21, 2024 and sell it today you would lose (125.00) from holding Carter Bank and or give up 7.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Carter Bank and  vs.  LINKBANCORP

Carter Bank

Risk-Adjusted Performance

Very Weak

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

LINKBANCORP

Risk-Adjusted Performance

Very Weak

Over the last 90 days LINKBANCORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Carter Bank and LINKBANCORP

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

The idea behind Carter Bank and and LINKBANCORP 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.