Correlation Between Alpine Banks and Princeton Capital

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

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

Diversification Opportunities for Alpine Banks and Princeton Capital

-0.11

Correlation Coefficient

Alpine Banks  Princeton Capital

Good diversification

The 3 months correlation between Alpine and Princeton is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Alpine Banks of and Princeton Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Princeton Capital and Alpine Banks 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 Alpine Banks of are associated (or correlated) with Princeton Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Princeton Capital has no effect on the direction of Alpine Banks i.e., Alpine Banks and Princeton Capital go up and down completely randomly.

Pair Corralation between Alpine Banks and Princeton Capital

Assuming the 90 days horizon Alpine Banks of is expected to generate 0.11 times more return on investment than Princeton Capital. However, Alpine Banks of is 9.08 times less risky than Princeton Capital. It trades about 0.09 of its potential returns per unit of risk. Princeton Capital is currently generating about 0.01 per unit of risk. If you would invest  2,852  in Alpine Banks of on September 27, 2024 and sell it today you would earn a total of  571.00  from holding Alpine Banks of or generate 20.02% return on investment over 90 days.

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

Alpine Banks of  vs.  Princeton Capital

Alpine Banks

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alpine Banks of are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward indicators, Alpine Banks sustained solid returns over the last few months and may actually be approaching a breakup point.

Princeton Capital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Princeton Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Princeton Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpine Banks and Princeton Capital

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

The idea behind Alpine Banks of and Princeton Capital 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.