Correlation Between Bank of Botetourt and Sturgis Bancorp

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

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

Diversification Opportunities for Bank of Botetourt and Sturgis Bancorp

-0.16

Correlation Coefficient

Bank of Botetourt  Sturgis Bancorp

Good diversification

The 3 months correlation between Bank and Sturgis is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Botetourt and Sturgis Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sturgis Bancorp and Bank of Botetourt 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 Botetourt are associated (or correlated) with Sturgis Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sturgis Bancorp has no effect on the direction of Bank of Botetourt i.e., Bank of Botetourt and Sturgis Bancorp go up and down completely randomly.

Pair Corralation between Bank of Botetourt and Sturgis Bancorp

If you would invest  3,092  in Bank of Botetourt on September 7, 2024 and sell it today you would earn a total of  258.00  from holding Bank of Botetourt or generate 8.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Bank of Botetourt  vs.  Sturgis Bancorp

Bank of Botetourt

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Botetourt are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Bank of Botetourt may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sturgis Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sturgis Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Sturgis Bancorp is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Bank of Botetourt and Sturgis Bancorp

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

The idea behind Bank of Botetourt and Sturgis Bancorp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.