Correlation Between Meridian Bank and Texas Community
Can any of the company-specific risk be diversified away by investing in both Meridian Bank and Texas Community 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 Meridian Bank and Texas Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meridian Bank and Texas Community Bancshares, you can compare the effects of market volatilities on Meridian Bank and Texas Community 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 Meridian Bank with a short position of Texas Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridian Bank and Texas Community.
Diversification Opportunities for Meridian Bank and Texas Community
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Meridian and Texas is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Meridian Bank and Texas Community Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Community Banc and Meridian Bank 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 Meridian Bank are associated (or correlated) with Texas Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Community Banc has no effect on the direction of Meridian Bank i.e., Meridian Bank and Texas Community go up and down completely randomly.
Pair Corralation between Meridian Bank and Texas Community
Given the investment horizon of 90 days Meridian Bank is expected to generate 3.0 times more return on investment than Texas Community. However, Meridian Bank is 3.0 times more volatile than Texas Community Bancshares. It trades about 0.24 of its potential returns per unit of risk. Texas Community Bancshares is currently generating about 0.11 per unit of risk. If you would invest 1,196 in Meridian Bank on September 18, 2024 and sell it today you would earn a total of 343.00 from holding Meridian Bank or generate 28.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Meridian Bank vs. Texas Community Bancshares
Performance |
Timeline |
Meridian Bank |
Texas Community Banc |
Meridian Bank and Texas Community Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Meridian Bank and Texas Community
The main advantage of trading using opposite Meridian Bank and Texas Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridian Bank position performs unexpectedly, Texas Community 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 Texas Community will offset losses from the drop in Texas Community's long position.Meridian Bank vs. Community West Bancshares | Meridian Bank vs. Investar Holding Corp | Meridian Bank vs. Finward Bancorp | Meridian Bank vs. First Financial Northwest |
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Check out your portfolio center.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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