Correlation Between Wayne Savings and Mainstreet Bank

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

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

Diversification Opportunities for Wayne Savings and Mainstreet Bank

-0.56

Correlation Coefficient

Wayne Savings  Mainstreet Bank

Excellent diversification

The 3 months correlation between Wayne and Mainstreet is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Wayne Savings Bancshares and Mainstreet Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstreet Bank and Wayne Savings 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 Wayne Savings Bancshares are associated (or correlated) with Mainstreet Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstreet Bank has no effect on the direction of Wayne Savings i.e., Wayne Savings and Mainstreet Bank go up and down completely randomly.

Pair Corralation between Wayne Savings and Mainstreet Bank

If you would invest  2,841  in Wayne Savings Bancshares on October 7, 2024 and sell it today you would earn a total of  0.00  from holding Wayne Savings Bancshares or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.4%
Values	Daily Returns

Wayne Savings Bancshares  vs.  Mainstreet Bank

Wayne Savings Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wayne Savings Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Wayne Savings is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Mainstreet Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Wayne Savings and Mainstreet Bank

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

The idea behind Wayne Savings Bancshares and Mainstreet 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.