Correlation Between North Dallas and Bank of Utica

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

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

Diversification Opportunities for North Dallas and Bank of Utica

0.86

Correlation Coefficient

North Dallas  Bank of Utica

Very poor diversification

The 3 months correlation between North and Bank is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding North Dallas Bank and Bank of Utica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Utica and North Dallas 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 North Dallas Bank are associated (or correlated) with Bank of Utica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Utica has no effect on the direction of North Dallas i.e., North Dallas and Bank of Utica go up and down completely randomly.

Pair Corralation between North Dallas and Bank of Utica

Given the investment horizon of 90 days North Dallas Bank is expected to under-perform the Bank of Utica. But the pink sheet apears to be less risky and, when comparing its historical volatility, North Dallas Bank is 3.62 times less risky than Bank of Utica. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Bank of Utica is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  43,000  in Bank of Utica on September 19, 2024 and sell it today you would earn a total of  11,100  from holding Bank of Utica or generate 25.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	89.69%
Values	Daily Returns

North Dallas Bank  vs.  Bank of Utica

North Dallas Bank

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in North Dallas Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, North Dallas may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bank of Utica

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Utica are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bank of Utica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with North Dallas and Bank of Utica

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

The idea behind North Dallas Bank and Bank of Utica 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.