Correlation Between Freedom Bank and Prime Meridian
Can any of the company-specific risk be diversified away by investing in both Freedom Bank and Prime Meridian 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 Freedom Bank and Prime Meridian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Bank of and Prime Meridian Holding, you can compare the effects of market volatilities on Freedom Bank and Prime Meridian 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 Freedom Bank with a short position of Prime Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and Prime Meridian.
Diversification Opportunities for Freedom Bank and Prime Meridian
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Freedom and Prime is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Prime Meridian Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Meridian Holding and Freedom Bank 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 Freedom Bank of are associated (or correlated) with Prime Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Meridian Holding has no effect on the direction of Freedom Bank i.e., Freedom Bank and Prime Meridian go up and down completely randomly.
Pair Corralation between Freedom Bank and Prime Meridian
Given the investment horizon of 90 days Freedom Bank of is expected to generate 0.38 times more return on investment than Prime Meridian. However, Freedom Bank of is 2.63 times less risky than Prime Meridian. It trades about -0.09 of its potential returns per unit of risk. Prime Meridian Holding is currently generating about -0.07 per unit of risk. If you would invest 1,032 in Freedom Bank of on December 28, 2024 and sell it today you would lose (42.00) from holding Freedom Bank of or give up 4.07% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Freedom Bank of vs. Prime Meridian Holding
Performance |
Timeline |
Freedom Bank |
Prime Meridian Holding |
Freedom Bank and Prime Meridian Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Freedom Bank and Prime Meridian
The main advantage of trading using opposite Freedom Bank and Prime Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank position performs unexpectedly, Prime Meridian 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 Prime Meridian will offset losses from the drop in Prime Meridian's long position.Freedom Bank vs. National Capital Bank | Freedom Bank vs. Community Heritage Financial | Freedom Bank vs. Citizens Financial Corp | Freedom Bank vs. Bank of Idaho |
Prime Meridian vs. Village Bank and | Prime Meridian vs. William Penn Bancorp | Prime Meridian vs. Pathfinder Bancorp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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