Correlation Between Tectonic Financial and Bancorp

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

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

Diversification Opportunities for Tectonic Financial and Bancorp

-0.58

Correlation Coefficient

Tectonic Financial  Bancorp

Excellent diversification

The 3 months correlation between Tectonic and Bancorp is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Financial PR and The Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bancorp and Tectonic Financial 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 Tectonic Financial PR are associated (or correlated) with Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancorp has no effect on the direction of Tectonic Financial i.e., Tectonic Financial and Bancorp go up and down completely randomly.

Pair Corralation between Tectonic Financial and Bancorp

Assuming the 90 days horizon Tectonic Financial PR is expected to generate 0.21 times more return on investment than Bancorp. However, Tectonic Financial PR is 4.85 times less risky than Bancorp. It trades about 0.1 of its potential returns per unit of risk. The Bancorp is currently generating about -0.18 per unit of risk. If you would invest  988.00  in Tectonic Financial PR on March 1, 2024 and sell it today you would earn a total of  35.00  from holding Tectonic Financial PR or generate 3.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Tectonic Financial PR  vs.  The Bancorp

Tectonic Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tectonic Financial PR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Tectonic Financial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Tectonic Financial and Bancorp

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

The idea behind Tectonic Financial PR and The 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.