Correlation Between Plumas Bancorp and Bank

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

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

Diversification Opportunities for Plumas Bancorp and Bank

0.0

Correlation Coefficient

Plumas Bancorp  Bank

Pay attention - limited upside

The 3 months correlation between Plumas and Bank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Plumas Bancorp and Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank and Plumas 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 Plumas Bancorp are associated (or correlated) with Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank has no effect on the direction of Plumas Bancorp i.e., Plumas Bancorp and Bank go up and down completely randomly.

Pair Corralation between Plumas Bancorp and Bank

If you would invest (100.00) in Bank on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Bank or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Plumas Bancorp  vs.  Bank

Plumas Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Plumas Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Plumas Bancorp and Bank

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

The idea behind Plumas Bancorp and Bank 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.