Correlation Between American National and Amerant Bancorp

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Can any of the company-specific risk be diversified away by investing in both American National and Amerant 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 American National and Amerant Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American National Bankshares and Amerant Bancorp, you can compare the effects of market volatilities on American National and Amerant 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 American National with a short position of Amerant Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of American National and Amerant Bancorp.

Diversification Opportunities for American National and Amerant Bancorp

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between American and Amerant is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding American National Bankshares and Amerant Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amerant Bancorp and American National 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 American National Bankshares are associated (or correlated) with Amerant Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amerant Bancorp has no effect on the direction of American National i.e., American National and Amerant Bancorp go up and down completely randomly.

Pair Corralation between American National and Amerant Bancorp

Given the investment horizon of 90 days American National Bankshares is expected to generate 0.9 times more return on investment than Amerant Bancorp. However, American National Bankshares is 1.11 times less risky than Amerant Bancorp. It trades about 0.05 of its potential returns per unit of risk. Amerant Bancorp is currently generating about 0.0 per unit of risk. If you would invest  3,313  in American National Bankshares on December 30, 2023 and sell it today you would earn a total of  1,463  from holding American National Bankshares or generate 44.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

American National Bankshares  vs.  Amerant Bancorp

 Performance 
       Timeline  
American National 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days American National Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, American National is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Amerant Bancorp 

Risk-Adjusted Performance

0 of 100

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

American National and Amerant Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American National and Amerant Bancorp

The main advantage of trading using opposite American National and Amerant Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American National position performs unexpectedly, Amerant 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 Amerant Bancorp will offset losses from the drop in Amerant Bancorp's long position.
The idea behind American National Bankshares and Amerant 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 CEOs Directory module to screen CEOs from public companies around the world.

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