Correlation Between Wayne Savings and Main Street

Can any of the company-specific risk be diversified away by investing in both Wayne Savings and Main Street 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 Main Street 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 Main Street Financial, you can compare the effects of market volatilities on Wayne Savings and Main Street 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 Main Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wayne Savings and Main Street.

Diversification Opportunities for Wayne Savings and Main Street

0.0

Correlation Coefficient

Wayne Savings  Main Street

Pay attention - limited upside

The 3 months correlation between Wayne and Main is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Wayne Savings Bancshares and Main Street Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Street Financial 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 Main Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Street Financial has no effect on the direction of Wayne Savings i.e., Wayne Savings and Main Street go up and down completely randomly.

Pair Corralation between Wayne Savings and Main Street

If you would invest  1,420  in Main Street Financial on September 3, 2024 and sell it today you would earn a total of  20.00  from holding Main Street Financial or generate 1.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Wayne Savings Bancshares  vs.  Main Street Financial

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.

Main Street Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Main Street Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Main Street may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Wayne Savings and Main Street

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

The idea behind Wayne Savings Bancshares and Main Street Financial 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.