Correlation Between BEO Bancorp and Baraboo Bancorporation

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

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

Diversification Opportunities for BEO Bancorp and Baraboo Bancorporation

0.46

Correlation Coefficient

BEO Bancorp  Baraboo Bancorporation

Very weak diversification

The 3 months correlation between BEO and Baraboo is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding BEO Bancorp and Baraboo Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baraboo Bancorporation and BEO 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 BEO Bancorp are associated (or correlated) with Baraboo Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baraboo Bancorporation has no effect on the direction of BEO Bancorp i.e., BEO Bancorp and Baraboo Bancorporation go up and down completely randomly.

Pair Corralation between BEO Bancorp and Baraboo Bancorporation

Given the investment horizon of 90 days BEO Bancorp is expected to under-perform the Baraboo Bancorporation. But the pink sheet apears to be less risky and, when comparing its historical volatility, BEO Bancorp is 1.03 times less risky than Baraboo Bancorporation. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Baraboo Bancorporation is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  296.00  in Baraboo Bancorporation on September 12, 2024 and sell it today you would earn a total of  35.00  from holding Baraboo Bancorporation or generate 11.82% return on investment over 90 days.

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

BEO Bancorp  vs.  Baraboo Bancorp.

BEO Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Baraboo Bancorporation

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baraboo Bancorporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Baraboo Bancorporation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BEO Bancorp and Baraboo Bancorporation

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

The idea behind BEO Bancorp and Baraboo Bancorporation 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.