Correlation Between LINKBANCORP and Alerus Financial

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

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

Diversification Opportunities for LINKBANCORP and Alerus Financial

0.5

Correlation Coefficient

LINKBANCORP  Alerus Financial

Very weak diversification

The 3 months correlation between LINKBANCORP and Alerus is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding LINKBANCORP and Alerus Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alerus Financial Corp and LINKBANCORP 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 LINKBANCORP are associated (or correlated) with Alerus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alerus Financial Corp has no effect on the direction of LINKBANCORP i.e., LINKBANCORP and Alerus Financial go up and down completely randomly.

Pair Corralation between LINKBANCORP and Alerus Financial

Given the investment horizon of 90 days LINKBANCORP is expected to under-perform the Alerus Financial. In addition to that, LINKBANCORP is 1.27 times more volatile than Alerus Financial Corp. It trades about -0.08 of its total potential returns per unit of risk. Alerus Financial Corp is currently generating about -0.04 per unit of volatility. If you would invest  1,937  in Alerus Financial Corp on December 23, 2024 and sell it today you would lose (77.00) from holding Alerus Financial Corp or give up 3.98% of portfolio value over 90 days.

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

LINKBANCORP  vs.  Alerus Financial Corp

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.

Alerus Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alerus Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Alerus Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with LINKBANCORP and Alerus Financial

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

The idea behind LINKBANCORP and Alerus Financial 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 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..