Correlation Between Solvay Bank and Grand River

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

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

Diversification Opportunities for Solvay Bank and Grand River

0.55

Correlation Coefficient

Solvay Bank  Grand River

Very weak diversification

The 3 months correlation between Solvay and Grand is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Solvay Bank Corp 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 Solvay 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 Solvay Bank Corp 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 Solvay Bank i.e., Solvay Bank and Grand River go up and down completely randomly.

Pair Corralation between Solvay Bank and Grand River

Given the investment horizon of 90 days Solvay Bank Corp is expected to generate 0.86 times more return on investment than Grand River. However, Solvay Bank Corp is 1.17 times less risky than Grand River. It trades about 0.08 of its potential returns per unit of risk. Grand River Commerce is currently generating about 0.03 per unit of risk. If you would invest  2,334  in Solvay Bank Corp on September 15, 2024 and sell it today you would earn a total of  476.00  from holding Solvay Bank Corp or generate 20.39% return on investment over 90 days.

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

Solvay Bank Corp  vs.  Grand River Commerce

Solvay Bank Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solvay Bank Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Solvay Bank is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Grand River Commerce

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand River Commerce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Grand River is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Solvay Bank and Grand River

The main advantage of trading using opposite Solvay Bank and Grand River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solvay Bank 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 Solvay Bank Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.