Correlation Between Associated Banc and Amerant Bancorp

Can any of the company-specific risk be diversified away by investing in both Associated Banc 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 Associated Banc and Amerant Bancorp 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 Amerant Bancorp, you can compare the effects of market volatilities on Associated Banc 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 Associated Banc with a short position of Amerant Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Banc and Amerant Bancorp.

Diversification Opportunities for Associated Banc and Amerant Bancorp

0.68

Correlation Coefficient

Associated Banc  Amerant Bancorp

Poor diversification

The 3 months correlation between Associated and Amerant is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Associated Banc Corp and Amerant Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amerant Bancorp 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 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 Associated Banc i.e., Associated Banc and Amerant Bancorp go up and down completely randomly.

Pair Corralation between Associated Banc and Amerant Bancorp

Considering the 90-day investment horizon Associated Banc Corp is expected to generate 0.72 times more return on investment than Amerant Bancorp. However, Associated Banc Corp is 1.39 times less risky than Amerant Bancorp. It trades about 0.12 of its potential returns per unit of risk. Amerant Bancorp is currently generating about 0.08 per unit of risk. 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

Associated Banc Corp  vs.  Amerant Bancorp

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.

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.

Pair Trading with Associated Banc and Amerant Bancorp

The main advantage of trading using opposite Associated Banc and Amerant Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Banc 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 Associated Banc Corp 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.