Correlation Between Amerant Bancorp and Associated Banc

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

By analyzing existing cross correlation between Amerant Bancorp and Associated Banc Corp, you can compare the effects of market volatilities on Amerant Bancorp and Associated Banc 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 Associated Banc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amerant Bancorp and Associated Banc.

Diversification Opportunities for Amerant Bancorp and Associated Banc

0.68

Correlation Coefficient

Amerant Bancorp  Associated Banc

Poor diversification

The 3 months correlation between Amerant and Associated is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Amerant Bancorp and Associated Banc Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Banc Corp 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 Associated Banc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Banc Corp has no effect on the direction of Amerant Bancorp i.e., Amerant Bancorp and Associated Banc go up and down completely randomly.

Pair Corralation between Amerant Bancorp and Associated Banc

Given the investment horizon of 90 days Amerant Bancorp is expected to generate 1.07 times less return on investment than Associated Banc. In addition to that, Amerant Bancorp is 1.39 times more volatile than Associated Banc Corp. It trades about 0.08 of its total potential returns per unit of risk. Associated Banc Corp is currently generating about 0.12 per unit of volatility. If you would invest  2,052  in Associated Banc Corp on January 26, 2024 and sell it today you would earn a total of  82.00  from holding Associated Banc Corp or generate 4.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Amerant Bancorp  vs.  Associated Banc Corp

Amerant Bancorp

Risk-Adjusted Performance

0 of 100

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.

Associated Banc Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Amerant Bancorp and Associated Banc

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

The idea behind Amerant Bancorp and Associated Banc Corp 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.