Correlation Between Lyons Bancorp and Grand River

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

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

Diversification Opportunities for Lyons Bancorp and Grand River

0.12

Correlation Coefficient

Lyons Bancorp  Grand River

Average diversification

The 3 months correlation between Lyons and Grand is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lyons Bancorp and Grand River Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand River Commerce and Lyons Bancorp 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 Lyons Bancorp are associated (or correlated) with Grand River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand River Commerce has no effect on the direction of Lyons Bancorp i.e., Lyons Bancorp and Grand River go up and down completely randomly.

Pair Corralation between Lyons Bancorp and Grand River

Given the investment horizon of 90 days Lyons Bancorp is expected to under-perform the Grand River. But the otc stock apears to be less risky and, when comparing its historical volatility, Lyons Bancorp is 2.26 times less risky than Grand River. The otc stock trades about 0.0 of its potential returns per unit of risk. The Grand River Commerce is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  295.00  in Grand River Commerce on December 21, 2024 and sell it today you would earn a total of  105.00  from holding Grand River Commerce or generate 35.59% return on investment over 90 days.

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

Lyons Bancorp  vs.  Grand River Commerce

Lyons Bancorp

Risk-Adjusted Performance

Very Weak

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

Grand River Commerce

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grand River Commerce are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Grand River showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lyons Bancorp and Grand River

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

The idea behind Lyons Bancorp and Grand River Commerce 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.