Correlation Between Ameris Bancorp and Arrow Financial
Can any of the company-specific risk be diversified away by investing in both Ameris Bancorp and Arrow Financial 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 Ameris Bancorp and Arrow Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameris Bancorp and Arrow Financial, you can compare the effects of market volatilities on Ameris Bancorp and Arrow Financial 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 Ameris Bancorp with a short position of Arrow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameris Bancorp and Arrow Financial.
Diversification Opportunities for Ameris Bancorp and Arrow Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ameris and Arrow is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ameris Bancorp and Arrow Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Financial and Ameris Bancorp 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 Ameris Bancorp are associated (or correlated) with Arrow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Financial has no effect on the direction of Ameris Bancorp i.e., Ameris Bancorp and Arrow Financial go up and down completely randomly.
Pair Corralation between Ameris Bancorp and Arrow Financial
Given the investment horizon of 90 days Ameris Bancorp is expected to generate 1.09 times more return on investment than Arrow Financial. However, Ameris Bancorp is 1.09 times more volatile than Arrow Financial. It trades about -0.15 of its potential returns per unit of risk. Arrow Financial is currently generating about -0.31 per unit of risk. If you would invest 4,744 in Ameris Bancorp on January 20, 2024 and sell it today you would lose (265.00) from holding Ameris Bancorp or give up 5.59% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Ameris Bancorp vs. Arrow Financial
Performance |
Timeline |
Ameris Bancorp |
Arrow Financial |
Ameris Bancorp and Arrow Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ameris Bancorp and Arrow Financial
The main advantage of trading using opposite Ameris Bancorp and Arrow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameris Bancorp position performs unexpectedly, Arrow Financial 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 Arrow Financial will offset losses from the drop in Arrow Financial's long position.The idea behind Ameris Bancorp and Arrow Financial 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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