Correlation Between Bank of Utica and Baraboo Bancorporation

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

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

Diversification Opportunities for Bank of Utica and Baraboo Bancorporation

0.65

Correlation Coefficient

Bank of Utica  Baraboo Bancorporation

Poor diversification

The 3 months correlation between Bank and Baraboo is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Utica and Baraboo Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baraboo Bancorporation and Bank of Utica 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 Bank of Utica 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 Bank of Utica i.e., Bank of Utica and Baraboo Bancorporation go up and down completely randomly.

Pair Corralation between Bank of Utica and Baraboo Bancorporation

Given the investment horizon of 90 days Bank of Utica is expected to generate 0.64 times more return on investment than Baraboo Bancorporation. However, Bank of Utica is 1.57 times less risky than Baraboo Bancorporation. It trades about 0.34 of its potential returns per unit of risk. Baraboo Bancorporation is currently generating about 0.13 per unit of risk. If you would invest  42,600  in Bank of Utica on September 12, 2024 and sell it today you would earn a total of  9,400  from holding Bank of Utica or generate 22.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.85%
Values	Daily Returns

Bank of Utica  vs.  Baraboo Bancorp.

Bank of Utica

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Utica are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Bank of Utica unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 fragile basic indicators, Baraboo Bancorporation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bank of Utica and Baraboo Bancorporation

The main advantage of trading using opposite Bank of Utica and Baraboo Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Utica 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 Bank of Utica 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.