Correlation Between Delhi Bank and Summit Bancshares

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

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

Diversification Opportunities for Delhi Bank and Summit Bancshares

0.15

Correlation Coefficient

Delhi Bank  Summit Bancshares

Average diversification

The 3 months correlation between Delhi and Summit is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Delhi Bank Corp and Summit Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Bancshares and Delhi Bank 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 Delhi Bank Corp are associated (or correlated) with Summit Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Bancshares has no effect on the direction of Delhi Bank i.e., Delhi Bank and Summit Bancshares go up and down completely randomly.

Pair Corralation between Delhi Bank and Summit Bancshares

Given the investment horizon of 90 days Delhi Bank is expected to generate 193.0 times less return on investment than Summit Bancshares. But when comparing it to its historical volatility, Delhi Bank Corp is 4.91 times less risky than Summit Bancshares. It trades about 0.0 of its potential returns per unit of risk. Summit Bancshares is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,251  in Summit Bancshares on September 4, 2024 and sell it today you would earn a total of  136.00  from holding Summit Bancshares or generate 3.2% return on investment over 90 days.

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

Delhi Bank Corp  vs.  Summit Bancshares

Delhi Bank Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Summit Bancshares

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Bancshares are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Summit Bancshares is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Delhi Bank and Summit Bancshares

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

The idea behind Delhi Bank Corp and Summit Bancshares 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.