Correlation Between BCB Bancorp and Reservoir Media

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

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

Diversification Opportunities for BCB Bancorp and Reservoir Media

0.71

Correlation Coefficient

BCB Bancorp  Reservoir Media

Poor diversification

The 3 months correlation between BCB and Reservoir is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding BCB Bancorp and Reservoir Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reservoir Media and BCB 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 BCB Bancorp are associated (or correlated) with Reservoir Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reservoir Media has no effect on the direction of BCB Bancorp i.e., BCB Bancorp and Reservoir Media go up and down completely randomly.

Pair Corralation between BCB Bancorp and Reservoir Media

Given the investment horizon of 90 days BCB Bancorp is expected to generate 2.32 times less return on investment than Reservoir Media. In addition to that, BCB Bancorp is 1.14 times more volatile than Reservoir Media. It trades about 0.03 of its total potential returns per unit of risk. Reservoir Media is currently generating about 0.08 per unit of volatility. If you would invest  605.00  in Reservoir Media on September 14, 2024 and sell it today you would earn a total of  300.00  from holding Reservoir Media or generate 49.59% return on investment over 90 days.

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

BCB Bancorp  vs.  Reservoir Media

BCB Bancorp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days BCB Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, BCB Bancorp is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Reservoir Media

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Reservoir Media are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Reservoir Media reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BCB Bancorp and Reservoir Media

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

The idea behind BCB Bancorp and Reservoir Media 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.