Correlation Between Teb Bancorp and ChoiceOne Financial

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

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

Diversification Opportunities for Teb Bancorp and ChoiceOne Financial

-0.16

Correlation Coefficient

Teb Bancorp  ChoiceOne Financial

Good diversification

The 3 months correlation between Teb and ChoiceOne is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Teb Bancorp and ChoiceOne Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChoiceOne Financial and Teb 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 Teb Bancorp are associated (or correlated) with ChoiceOne Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChoiceOne Financial has no effect on the direction of Teb Bancorp i.e., Teb Bancorp and ChoiceOne Financial go up and down completely randomly.

Pair Corralation between Teb Bancorp and ChoiceOne Financial

Given the investment horizon of 90 days Teb Bancorp is expected to generate 2.62 times more return on investment than ChoiceOne Financial. However, Teb Bancorp is 2.62 times more volatile than ChoiceOne Financial Services. It trades about 0.06 of its potential returns per unit of risk. ChoiceOne Financial Services is currently generating about 0.1 per unit of risk. If you would invest  650.00  in Teb Bancorp on October 22, 2024 and sell it today you would earn a total of  87.00  from holding Teb Bancorp or generate 13.38% return on investment over 90 days.

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

Teb Bancorp  vs.  ChoiceOne Financial Services

Teb Bancorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Teb Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, Teb Bancorp sustained solid returns over the last few months and may actually be approaching a breakup point.

ChoiceOne Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ChoiceOne Financial Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, ChoiceOne Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Teb Bancorp and ChoiceOne Financial

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

The idea behind Teb Bancorp and ChoiceOne Financial Services 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.