Correlation Between Investar Holding and Main Street

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

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

Diversification Opportunities for Investar Holding and Main Street

0.58

Correlation Coefficient

Investar Holding  Main Street

Very weak diversification

The 3 months correlation between Investar and Main is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Investar Holding Corp and Main Street Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Street Financial and Investar Holding 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 Investar Holding Corp are associated (or correlated) with Main Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Street Financial has no effect on the direction of Investar Holding i.e., Investar Holding and Main Street go up and down completely randomly.

Pair Corralation between Investar Holding and Main Street

Given the investment horizon of 90 days Investar Holding Corp is expected to generate 0.94 times more return on investment than Main Street. However, Investar Holding Corp is 1.06 times less risky than Main Street. It trades about 0.01 of its potential returns per unit of risk. Main Street Financial is currently generating about 0.0 per unit of risk. If you would invest  1,976  in Investar Holding Corp on October 22, 2024 and sell it today you would earn a total of  36.00  from holding Investar Holding Corp or generate 1.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Investar Holding Corp  vs.  Main Street Financial

Investar Holding Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Investar Holding Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Investar Holding is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Main Street Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Main Street Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Main Street is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Investar Holding and Main Street

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

The idea behind Investar Holding Corp and Main Street Financial 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..