Correlation Between Community Bankers and BEO Bancorp

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

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

Diversification Opportunities for Community Bankers and BEO Bancorp

0.18

Correlation Coefficient

Community Bankers  BEO Bancorp

Average diversification

The 3 months correlation between Community and BEO is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Community Bankers and BEO Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEO Bancorp and Community Bankers 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 Community Bankers are associated (or correlated) with BEO Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEO Bancorp has no effect on the direction of Community Bankers i.e., Community Bankers and BEO Bancorp go up and down completely randomly.

Pair Corralation between Community Bankers and BEO Bancorp

Given the investment horizon of 90 days Community Bankers is expected to generate 1.22 times less return on investment than BEO Bancorp. In addition to that, Community Bankers is 1.75 times more volatile than BEO Bancorp. It trades about 0.04 of its total potential returns per unit of risk. BEO Bancorp is currently generating about 0.08 per unit of volatility. If you would invest  7,696  in BEO Bancorp on December 28, 2024 and sell it today you would earn a total of  754.00  from holding BEO Bancorp or generate 9.8% return on investment over 90 days.

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

Community Bankers  vs.  BEO Bancorp

Community Bankers

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Community Bankers are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Community Bankers may actually be approaching a critical reversion point that can send shares even higher in April 2025.

BEO Bancorp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BEO Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, BEO Bancorp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Community Bankers and BEO Bancorp

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

The idea behind Community Bankers and BEO 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..