Correlation Between Ames National and Associated Banc
Can any of the company-specific risk be diversified away by investing in both Ames National 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 Ames National and Associated Banc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ames National and Associated Banc Corp, you can compare the effects of market volatilities on Ames National 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 Ames National with a short position of Associated Banc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ames National and Associated Banc.
Diversification Opportunities for Ames National and Associated Banc
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ames and Associated is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ames National 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 Ames 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 Ames National 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 Ames National i.e., Ames National and Associated Banc go up and down completely randomly.
Pair Corralation between Ames National and Associated Banc
Given the investment horizon of 90 days Ames National is expected to under-perform the Associated Banc. But the stock apears to be less risky and, when comparing its historical volatility, Ames National is 1.04 times less risky than Associated Banc. The stock trades about -0.05 of its potential returns per unit of risk. The Associated Banc Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,062 in Associated Banc Corp on January 24, 2024 and sell it today you would earn a total of 36.00 from holding Associated Banc Corp or generate 1.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ames National vs. Associated Banc Corp
Performance |
Timeline |
Ames National |
Associated Banc Corp |
Ames National and Associated Banc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ames National and Associated Banc
The main advantage of trading using opposite Ames National and Associated Banc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ames National 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.Ames National vs. HMN Financial | Ames National vs. Lake Shore Bancorp | Ames National vs. Rhinebeck Bancorp |
Associated Banc vs. HMN Financial | Associated Banc vs. Lake Shore Bancorp | Associated Banc vs. Rhinebeck Bancorp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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