Correlation Between BEO Bancorp and United Tennessee

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

By analyzing existing cross correlation between BEO Bancorp and United Tennessee Bankshares, you can compare the effects of market volatilities on BEO Bancorp and United Tennessee 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 United Tennessee. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEO Bancorp and United Tennessee.

Diversification Opportunities for BEO Bancorp and United Tennessee

-0.67

Correlation Coefficient

BEO Bancorp  United Tennessee

Excellent diversification

The 3 months correlation between BEO and United is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding BEO Bancorp and United Tennessee Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Tennessee Ban 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 United Tennessee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Tennessee Ban has no effect on the direction of BEO Bancorp i.e., BEO Bancorp and United Tennessee go up and down completely randomly.

Pair Corralation between BEO Bancorp and United Tennessee

If you would invest  7,500  in BEO Bancorp on September 5, 2024 and sell it today you would earn a total of  200.00  from holding BEO Bancorp or generate 2.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

BEO Bancorp  vs.  United Tennessee Bankshares

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.

United Tennessee Ban

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Tennessee Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, United Tennessee is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BEO Bancorp and United Tennessee

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

The idea behind BEO Bancorp and United Tennessee Bankshares 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.