Correlation Between Andover Bancorp and Banco Del

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

By analyzing existing cross correlation between Andover Bancorp and Banco del Bajo, you can compare the effects of market volatilities on Andover Bancorp and Banco Del 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 Andover Bancorp with a short position of Banco Del. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andover Bancorp and Banco Del.

Diversification Opportunities for Andover Bancorp and Banco Del

-0.31

Correlation Coefficient

Andover Bancorp  Banco Del

Very good diversification

The 3 months correlation between Andover and Banco is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Andover Bancorp and Banco del Bajo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco del Bajo and Andover Bancorp 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 Andover Bancorp are associated (or correlated) with Banco Del. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco del Bajo has no effect on the direction of Andover Bancorp i.e., Andover Bancorp and Banco Del go up and down completely randomly.

Pair Corralation between Andover Bancorp and Banco Del

Given the investment horizon of 90 days Andover Bancorp is expected to under-perform the Banco Del. In addition to that, Andover Bancorp is 1.85 times more volatile than Banco del Bajo. It trades about -0.13 of its total potential returns per unit of risk. Banco del Bajo is currently generating about 0.13 per unit of volatility. If you would invest  206.00  in Banco del Bajo on September 12, 2024 and sell it today you would earn a total of  4.00  from holding Banco del Bajo or generate 1.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	33.33%
Values	Daily Returns

Andover Bancorp  vs.  Banco del Bajo

Andover Bancorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Andover Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Andover Bancorp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Banco del Bajo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco del Bajo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Andover Bancorp and Banco Del

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

The idea behind Andover Bancorp and Banco del Bajo 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.