Correlation Between RBACN and Freedom Bank

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

By analyzing existing cross correlation between RBACN 675 15 MAR 28 and Freedom Bank of, you can compare the effects of market volatilities on RBACN and Freedom 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 RBACN with a short position of Freedom Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBACN and Freedom Bank.

Diversification Opportunities for RBACN and Freedom Bank

0.07

Correlation Coefficient

RBACN  Freedom Bank

Significant diversification

The 3 months correlation between RBACN and Freedom is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding RBACN 675 15 MAR 28 and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank and RBACN 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 RBACN 675 15 MAR 28 are associated (or correlated) with Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of RBACN i.e., RBACN and Freedom Bank go up and down completely randomly.

Pair Corralation between RBACN and Freedom Bank

Assuming the 90 days trading horizon RBACN 675 15 MAR 28 is expected to under-perform the Freedom Bank. But the bond apears to be less risky and, when comparing its historical volatility, RBACN 675 15 MAR 28 is 2.2 times less risky than Freedom Bank. The bond trades about -0.31 of its potential returns per unit of risk. The Freedom Bank of is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,061  in Freedom Bank of on September 28, 2024 and sell it today you would earn a total of  0.00  from holding Freedom Bank of or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

RBACN 675 15 MAR 28  vs.  Freedom Bank of

RBACN 675 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RBACN 675 15 MAR 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, RBACN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Freedom Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freedom Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent 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 RBACN and Freedom Bank

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

The idea behind RBACN 675 15 MAR 28 and Freedom Bank of 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.