Correlation Between Elmer Bancorp and Delhi Bank

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

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

Diversification Opportunities for Elmer Bancorp and Delhi Bank

-0.02

Correlation Coefficient

Elmer Bancorp  Delhi Bank

Good diversification

The 3 months correlation between Elmer and Delhi is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Elmer Bancorp and Delhi Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delhi Bank Corp and Elmer Bancorp 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 Elmer Bancorp are associated (or correlated) with Delhi Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delhi Bank Corp has no effect on the direction of Elmer Bancorp i.e., Elmer Bancorp and Delhi Bank go up and down completely randomly.

Pair Corralation between Elmer Bancorp and Delhi Bank

Given the investment horizon of 90 days Elmer Bancorp is expected to generate 1.4 times more return on investment than Delhi Bank. However, Elmer Bancorp is 1.4 times more volatile than Delhi Bank Corp. It trades about 0.03 of its potential returns per unit of risk. Delhi Bank Corp is currently generating about 0.01 per unit of risk. If you would invest  1,899  in Elmer Bancorp on September 28, 2024 and sell it today you would earn a total of  276.00  from holding Elmer Bancorp or generate 14.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.76%
Values	Daily Returns

Elmer Bancorp  vs.  Delhi Bank Corp

Elmer Bancorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Elmer Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Elmer Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Delhi Bank Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Delhi Bank Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Delhi Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Elmer Bancorp and Delhi Bank

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

The idea behind Elmer Bancorp and Delhi Bank Corp 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 Stocks Directory module to find actively traded stocks across global markets.