Correlation Between Private Bancorp and Burke Herbert

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

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

Diversification Opportunities for Private Bancorp and Burke Herbert

0.8

Correlation Coefficient

Private Bancorp  Burke Herbert

Very poor diversification

The 3 months correlation between Private and Burke is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Private Bancorp of and Burke Herbert Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burke Herbert Financial and Private 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 Private Bancorp of are associated (or correlated) with Burke Herbert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burke Herbert Financial has no effect on the direction of Private Bancorp i.e., Private Bancorp and Burke Herbert go up and down completely randomly.

Pair Corralation between Private Bancorp and Burke Herbert

Given the investment horizon of 90 days Private Bancorp of is expected to generate 0.55 times more return on investment than Burke Herbert. However, Private Bancorp of is 1.82 times less risky than Burke Herbert. It trades about -0.07 of its potential returns per unit of risk. Burke Herbert Financial is currently generating about -0.08 per unit of risk. If you would invest  5,700  in Private Bancorp of on December 28, 2024 and sell it today you would lose (200.00) from holding Private Bancorp of or give up 3.51% of portfolio value over 90 days.

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

Private Bancorp of  vs.  Burke Herbert Financial

Private Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Private Bancorp of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Private Bancorp is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Burke Herbert Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Burke Herbert Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Private Bancorp and Burke Herbert

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

The idea behind Private Bancorp of and Burke Herbert 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.