Correlation Between Evans Bancorp and Ponce Financial

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

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

Diversification Opportunities for Evans Bancorp and Ponce Financial

0.47

Correlation Coefficient

Evans Bancorp  Ponce Financial

Very weak diversification

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

Pair Corralation between Evans Bancorp and Ponce Financial

Given the investment horizon of 90 days Evans Bancorp is expected to under-perform the Ponce Financial. In addition to that, Evans Bancorp is 1.18 times more volatile than Ponce Financial Group. It trades about -0.07 of its total potential returns per unit of risk. Ponce Financial Group is currently generating about 0.03 per unit of volatility. If you would invest  1,248  in Ponce Financial Group on December 19, 2024 and sell it today you would earn a total of  27.00  from holding Ponce Financial Group or generate 2.16% return on investment over 90 days.

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

Evans Bancorp  vs.  Ponce Financial Group

Evans Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evans Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Ponce Financial Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ponce Financial Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Ponce Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Evans Bancorp and Ponce Financial

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

The idea behind Evans Bancorp and Ponce Financial Group 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.