Correlation Between Luther Burbank and Bank First

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

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

Diversification Opportunities for Luther Burbank and Bank First

0.44

Correlation Coefficient

Luther Burbank  Bank First

Very weak diversification

The 3 months correlation between Luther and Bank is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Luther Burbank and Bank First National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank First National and Luther Burbank 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 Luther Burbank are associated (or correlated) with Bank First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank First National has no effect on the direction of Luther Burbank i.e., Luther Burbank and Bank First go up and down completely randomly.

Pair Corralation between Luther Burbank and Bank First

If you would invest  8,019  in Bank First National on September 14, 2024 and sell it today you would earn a total of  2,701  from holding Bank First National or generate 33.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.79%
Values	Daily Returns

Luther Burbank  vs.  Bank First National

Luther Burbank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Luther Burbank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Luther Burbank is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Bank First National

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank First National are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Bank First exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Luther Burbank and Bank First

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

The idea behind Luther Burbank and Bank First National 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.