Correlation Between Ancestry and American Bank

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

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

Diversification Opportunities for Ancestry and American Bank

0.0

Correlation Coefficient

Ancestry  American Bank

Pay attention - limited upside

The 3 months correlation between Ancestry and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ancestry and American Bank Note in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Bank Note and Ancestry 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 Ancestry are associated (or correlated) with American Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Bank Note has no effect on the direction of Ancestry i.e., Ancestry and American Bank go up and down completely randomly.

Pair Corralation between Ancestry and American Bank

If you would invest (100.00) in American Bank Note on January 26, 2024 and sell it today you would earn a total of  100.00  from holding American Bank Note or generate -100.0% return on investment over 90 days.

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

Ancestry  vs.  American Bank Note

Ancestry

Risk-Adjusted Performance

0 of 100

Very Weak

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

American Bank Note

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Bank Note has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, American Bank is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ancestry and American Bank

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

The idea behind Ancestry and American Bank Note 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.