Correlation Between Greenville Federal and Katahdin Bankshares

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

By analyzing existing cross correlation between Greenville Federal Financial and Katahdin Bankshares Corp, you can compare the effects of market volatilities on Greenville Federal and Katahdin Bankshares 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 Greenville Federal with a short position of Katahdin Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greenville Federal and Katahdin Bankshares.

Diversification Opportunities for Greenville Federal and Katahdin Bankshares

-0.7

Correlation Coefficient

Greenville Federal  Katahdin Bankshares

Excellent diversification

The 3 months correlation between Greenville and Katahdin is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Greenville Federal Financial and Katahdin Bankshares Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Katahdin Bankshares Corp and Greenville Federal 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 Greenville Federal Financial are associated (or correlated) with Katahdin Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Katahdin Bankshares Corp has no effect on the direction of Greenville Federal i.e., Greenville Federal and Katahdin Bankshares go up and down completely randomly.

Pair Corralation between Greenville Federal and Katahdin Bankshares

Given the investment horizon of 90 days Greenville Federal Financial is expected to generate 1.22 times more return on investment than Katahdin Bankshares. However, Greenville Federal is 1.22 times more volatile than Katahdin Bankshares Corp. It trades about 0.01 of its potential returns per unit of risk. Katahdin Bankshares Corp is currently generating about -0.08 per unit of risk. If you would invest  720.00  in Greenville Federal Financial on October 21, 2024 and sell it today you would earn a total of  1.00  from holding Greenville Federal Financial or generate 0.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.02%
Values	Daily Returns

Greenville Federal Financial  vs.  Katahdin Bankshares Corp

Greenville Federal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenville Federal Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Greenville Federal is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Katahdin Bankshares Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Katahdin Bankshares Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Katahdin Bankshares is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Greenville Federal and Katahdin Bankshares

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

The idea behind Greenville Federal Financial and Katahdin Bankshares Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.