Correlation Between Northeast Indiana and Quaint Oak

Can any of the company-specific risk be diversified away by investing in both Northeast Indiana and Quaint Oak 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 Northeast Indiana and Quaint Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Northeast Indiana and Quaint Oak

0.13

Correlation Coefficient

Northeast Indiana  Quaint Oak

Average diversification

The 3 months correlation between Northeast and Quaint is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Northeast Indiana Bancorp and Quaint Oak Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaint Oak Bancorp and Northeast Indiana 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 Northeast Indiana Bancorp are associated (or correlated) with Quaint Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaint Oak Bancorp has no effect on the direction of Northeast Indiana i.e., Northeast Indiana and Quaint Oak go up and down completely randomly.

Pair Corralation between Northeast Indiana and Quaint Oak

If you would invest  989.00  in Quaint Oak Bancorp on September 2, 2024 and sell it today you would earn a total of  115.00  from holding Quaint Oak Bancorp or generate 11.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Northeast Indiana Bancorp  vs.  Quaint Oak Bancorp

Northeast Indiana Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northeast Indiana Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Northeast Indiana is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Quaint Oak Bancorp

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Northeast Indiana and Quaint Oak

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

The idea behind Northeast Indiana Bancorp and Quaint Oak 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 Global Correlations module to find global opportunities by holding instruments from different markets.