Correlation Between Community Bankers and Bank of San

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

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

Diversification Opportunities for Community Bankers and Bank of San

0.88

Correlation Coefficient

Community Bankers  Bank of San

Very poor diversification

The 3 months correlation between Community and Bank is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Community Bankers and Bank of San in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of San 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 Bank of San. 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 San has no effect on the direction of Community Bankers i.e., Community Bankers and Bank of San go up and down completely randomly.

Pair Corralation between Community Bankers and Bank of San

Given the investment horizon of 90 days Community Bankers is expected to generate 8.49 times more return on investment than Bank of San. However, Community Bankers is 8.49 times more volatile than Bank of San. It trades about 0.23 of its potential returns per unit of risk. Bank of San is currently generating about 0.32 per unit of risk. If you would invest  500.00  in Community Bankers on October 10, 2024 and sell it today you would earn a total of  82.00  from holding Community Bankers or generate 16.4% return on investment over 90 days.

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

Community Bankers  vs.  Bank of San

Community Bankers

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Community Bankers are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Community Bankers reported solid returns over the last few months and may actually be approaching a breakup point.

Bank of San

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of San are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Bank of San may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Community Bankers and Bank of San

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

The idea behind Community Bankers and Bank of San 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.