Correlation Between Associated Banc and Blueharbor Bank

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

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

Diversification Opportunities for Associated Banc and Blueharbor Bank

0.02

Correlation Coefficient

Associated Banc  Blueharbor Bank

Significant diversification

The 3 months correlation between Associated and Blueharbor is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Associated Banc Corp and Blueharbor Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blueharbor Bank and Associated Banc 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 Associated Banc Corp are associated (or correlated) with Blueharbor Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blueharbor Bank has no effect on the direction of Associated Banc i.e., Associated Banc and Blueharbor Bank go up and down completely randomly.

Pair Corralation between Associated Banc and Blueharbor Bank

Assuming the 90 days trading horizon Associated Banc Corp is expected to generate 0.77 times more return on investment than Blueharbor Bank. However, Associated Banc Corp is 1.3 times less risky than Blueharbor Bank. It trades about 0.0 of its potential returns per unit of risk. Blueharbor Bank is currently generating about -0.01 per unit of risk. If you would invest  1,933  in Associated Banc Corp on March 19, 2024 and sell it today you would lose (3.00) from holding Associated Banc Corp or give up 0.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	80.77%
Values	Daily Returns

Associated Banc Corp  vs.  Blueharbor Bank

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 nearly stable fundamental drivers, Associated Banc is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Blueharbor Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blueharbor Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Blueharbor Bank is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Associated Banc and Blueharbor Bank

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

The idea behind Associated Banc Corp and Blueharbor Bank 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.