Correlation Between Dimeco and Jonestown Bank
Can any of the company-specific risk be diversified away by investing in both Dimeco and Jonestown Bank 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 Dimeco and Jonestown Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimeco Inc and Jonestown Bank and, you can compare the effects of market volatilities on Dimeco and Jonestown Bank 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 Dimeco with a short position of Jonestown Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimeco and Jonestown Bank.
Diversification Opportunities for Dimeco and Jonestown Bank
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dimeco and Jonestown is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dimeco Inc and Jonestown Bank and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jonestown Bank and Dimeco 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 Dimeco Inc are associated (or correlated) with Jonestown Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jonestown Bank has no effect on the direction of Dimeco i.e., Dimeco and Jonestown Bank go up and down completely randomly.
Pair Corralation between Dimeco and Jonestown Bank
Given the investment horizon of 90 days Dimeco Inc is expected to under-perform the Jonestown Bank. In addition to that, Dimeco is 1.22 times more volatile than Jonestown Bank and. It trades about -0.09 of its total potential returns per unit of risk. Jonestown Bank and is currently generating about -0.07 per unit of volatility. If you would invest 2,974 in Jonestown Bank and on October 11, 2024 and sell it today you would lose (74.00) from holding Jonestown Bank and or give up 2.49% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Dimeco Inc vs. Jonestown Bank and
Performance |
Timeline |
Dimeco Inc |
Jonestown Bank |
Dimeco and Jonestown Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dimeco and Jonestown Bank
The main advantage of trading using opposite Dimeco and Jonestown Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimeco position performs unexpectedly, Jonestown Bank 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 Jonestown Bank will offset losses from the drop in Jonestown Bank's long position.Dimeco vs. Absa Group Limited | Dimeco vs. Aozora Bank Ltd | Dimeco vs. Fidelity DD Bancorp | Dimeco vs. Chemung Financial Corp |
Jonestown Bank vs. Ledyard Financial Group | Jonestown Bank vs. JD Bancshares | Jonestown Bank vs. LINKBANCORP | Jonestown Bank vs. Dimeco Inc |
Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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