Correlation Between Equity Bancshares, and Bridgewater Bancshares

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

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

Diversification Opportunities for Equity Bancshares, and Bridgewater Bancshares

0.68

Correlation Coefficient

Equity Bancshares,  Bridgewater Bancshares

Poor diversification

The 3 months correlation between Equity and Bridgewater is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Equity Bancshares, and Bridgewater Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgewater Bancshares and Equity Bancshares, 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 Equity Bancshares, are associated (or correlated) with Bridgewater Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgewater Bancshares has no effect on the direction of Equity Bancshares, i.e., Equity Bancshares, and Bridgewater Bancshares go up and down completely randomly.

Pair Corralation between Equity Bancshares, and Bridgewater Bancshares

Given the investment horizon of 90 days Equity Bancshares, is expected to under-perform the Bridgewater Bancshares. But the stock apears to be less risky and, when comparing its historical volatility, Equity Bancshares, is 1.21 times less risky than Bridgewater Bancshares. The stock trades about -0.48 of its potential returns per unit of risk. The Bridgewater Bancshares is currently generating about -0.29 of returns per unit of risk over similar time horizon. If you would invest  1,494  in Bridgewater Bancshares on October 3, 2024 and sell it today you would lose (143.00) from holding Bridgewater Bancshares or give up 9.57% of portfolio value over 90 days.

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

Equity Bancshares,  vs.  Bridgewater Bancshares

Equity Bancshares,

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Bancshares, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Equity Bancshares, may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bridgewater Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bridgewater Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bridgewater Bancshares is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Equity Bancshares, and Bridgewater Bancshares

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

The idea behind Equity Bancshares, and Bridgewater Bancshares 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.