Correlation Between Amerant Bancorp and American National
Can any of the company-specific risk be diversified away by investing in both Amerant Bancorp and American National 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 Amerant Bancorp and American National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amerant Bancorp and American National Bankshares, you can compare the effects of market volatilities on Amerant Bancorp and American National 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 Amerant Bancorp with a short position of American National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amerant Bancorp and American National.
Diversification Opportunities for Amerant Bancorp and American National
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Amerant and American is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Amerant Bancorp and American National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American National and Amerant 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 Amerant Bancorp are associated (or correlated) with American National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American National has no effect on the direction of Amerant Bancorp i.e., Amerant Bancorp and American National go up and down completely randomly.
Pair Corralation between Amerant Bancorp and American National
Given the investment horizon of 90 days Amerant Bancorp is expected to generate 3.16 times less return on investment than American National. But when comparing it to its historical volatility, Amerant Bancorp is 1.07 times less risky than American National. It trades about 0.04 of its potential returns per unit of risk. American National Bankshares is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,653 in American National Bankshares on January 19, 2024 and sell it today you would earn a total of 2,123 from holding American National Bankshares or generate 80.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 94.27% |
Values | Daily Returns |
Amerant Bancorp vs. American National Bankshares
Performance |
Timeline |
Amerant Bancorp |
American National |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Amerant Bancorp and American National Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amerant Bancorp and American National
The main advantage of trading using opposite Amerant Bancorp and American National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amerant Bancorp position performs unexpectedly, American National 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 National will offset losses from the drop in American National's long position.Amerant Bancorp vs. Affinity Bancshares | Amerant Bancorp vs. Southern California Bancorp | Amerant Bancorp vs. Auburn National Bancorporation | Amerant Bancorp vs. BayCom Corp |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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