Correlation Between International Bancshares and LINKBANCORP

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

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

Diversification Opportunities for International Bancshares and LINKBANCORP

0.42

Correlation Coefficient

International Bancshares  LINKBANCORP

Very weak diversification

The 3 months correlation between International and LINKBANCORP is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding International Bancshares and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP and International 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 International Bancshares are associated (or correlated) with LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of International Bancshares i.e., International Bancshares and LINKBANCORP go up and down completely randomly.

Pair Corralation between International Bancshares and LINKBANCORP

Given the investment horizon of 90 days International Bancshares is expected to generate 0.78 times more return on investment than LINKBANCORP. However, International Bancshares is 1.28 times less risky than LINKBANCORP. It trades about 0.01 of its potential returns per unit of risk. LINKBANCORP is currently generating about -0.05 per unit of risk. If you would invest  6,279  in International Bancshares on December 30, 2024 and sell it today you would lose (7.00) from holding International Bancshares or give up 0.11% of portfolio value over 90 days.

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

International Bancshares  vs.  LINKBANCORP

International Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, International Bancshares is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

LINKBANCORP

Risk-Adjusted Performance

Very Weak

Over the last 90 days LINKBANCORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with International Bancshares and LINKBANCORP

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

The idea behind International Bancshares and LINKBANCORP 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.