Correlation Between Freedom Bank and Solvay Bank
Can any of the company-specific risk be diversified away by investing in both Freedom Bank and Solvay 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 Freedom Bank and Solvay Bank 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 Solvay Bank Corp, you can compare the effects of market volatilities on Freedom Bank and Solvay 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 Freedom Bank with a short position of Solvay Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and Solvay Bank.
Diversification Opportunities for Freedom Bank and Solvay Bank
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Freedom and Solvay is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Solvay Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solvay Bank Corp 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 Solvay Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solvay Bank Corp has no effect on the direction of Freedom Bank i.e., Freedom Bank and Solvay Bank go up and down completely randomly.
Pair Corralation between Freedom Bank and Solvay Bank
Given the investment horizon of 90 days Freedom Bank is expected to generate 1.22 times less return on investment than Solvay Bank. But when comparing it to its historical volatility, Freedom Bank of is 2.58 times less risky than Solvay Bank. It trades about 0.07 of its potential returns per unit of risk. Solvay Bank Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,675 in Solvay Bank Corp on December 3, 2024 and sell it today you would earn a total of 25.00 from holding Solvay Bank Corp or generate 0.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Freedom Bank of vs. Solvay Bank Corp
Performance |
Timeline |
Freedom Bank |
Solvay Bank Corp |
Freedom Bank and Solvay Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Freedom Bank and Solvay Bank
The main advantage of trading using opposite Freedom Bank and Solvay Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank position performs unexpectedly, Solvay 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 Solvay Bank will offset losses from the drop in Solvay Bank'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 |
Solvay Bank vs. Southern Michigan Bancorp | Solvay Bank vs. Summit Bancshares | Solvay Bank vs. Tri County Financial Group | Solvay Bank vs. QNB Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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