Correlation Between Village Bank and Banner

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

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

Diversification Opportunities for Village Bank and Banner

0.5

Correlation Coefficient

Village Bank  Banner

Very weak diversification

The 3 months correlation between Village and Banner is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Village Bank and and Banner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banner and Village 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 Village Bank and are associated (or correlated) with Banner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banner has no effect on the direction of Village Bank i.e., Village Bank and Banner go up and down completely randomly.

Pair Corralation between Village Bank and Banner

Given the investment horizon of 90 days Village Bank and is expected to generate 33.06 times more return on investment than Banner. However, Village Bank is 33.06 times more volatile than Banner. It trades about 0.07 of its potential returns per unit of risk. Banner is currently generating about 0.02 per unit of risk. If you would invest  5,778  in Village Bank and on October 15, 2024 and sell it today you would earn a total of  2,062  from holding Village Bank and or generate 35.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	77.78%
Values	Daily Returns

Village Bank and  vs.  Banner

Village Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Village Bank and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Village Bank is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Banner

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Banner are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Banner is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Village Bank and Banner

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

The idea behind Village Bank and and Banner 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 CEOs Directory module to screen CEOs from public companies around the world.