Correlation Between Equity Bancshares, and Provident Financial

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

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

Diversification Opportunities for Equity Bancshares, and Provident Financial

0.47

Correlation Coefficient

Equity Bancshares,  Provident Financial

Very weak diversification

The 3 months correlation between Equity and Provident is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Equity Bancshares, and Provident Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provident Financial 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 Provident Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provident Financial has no effect on the direction of Equity Bancshares, i.e., Equity Bancshares, and Provident Financial go up and down completely randomly.

Pair Corralation between Equity Bancshares, and Provident Financial

Given the investment horizon of 90 days Equity Bancshares, is expected to generate 1.38 times more return on investment than Provident Financial. However, Equity Bancshares, is 1.38 times more volatile than Provident Financial Holdings. It trades about 0.05 of its potential returns per unit of risk. Provident Financial Holdings is currently generating about 0.02 per unit of risk. If you would invest  2,791  in Equity Bancshares, on October 19, 2024 and sell it today you would earn a total of  1,509  from holding Equity Bancshares, or generate 54.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Equity Bancshares,  vs.  Provident Financial Holdings

Equity Bancshares,

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Bancshares, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Equity Bancshares, is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Provident Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Provident Financial Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Provident Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Equity Bancshares, and Provident Financial

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

The idea behind Equity Bancshares, and Provident Financial Holdings 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.