Correlation Between Bridgewater Bancshares and Metropolitan Bank
Can any of the company-specific risk be diversified away by investing in both Bridgewater Bancshares and Metropolitan 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 Bridgewater Bancshares and Metropolitan Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgewater Bancshares and Metropolitan Bank Holding, you can compare the effects of market volatilities on Bridgewater Bancshares and Metropolitan 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 Bridgewater Bancshares with a short position of Metropolitan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgewater Bancshares and Metropolitan Bank.
Diversification Opportunities for Bridgewater Bancshares and Metropolitan Bank
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bridgewater and Metropolitan is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bridgewater Bancshares and Metropolitan Bank Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank Holding and Bridgewater Bancshares 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 Bridgewater Bancshares are associated (or correlated) with Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank Holding has no effect on the direction of Bridgewater Bancshares i.e., Bridgewater Bancshares and Metropolitan Bank go up and down completely randomly.
Pair Corralation between Bridgewater Bancshares and Metropolitan Bank
Considering the 90-day investment horizon Bridgewater Bancshares is expected to generate 0.54 times more return on investment than Metropolitan Bank. However, Bridgewater Bancshares is 1.84 times less risky than Metropolitan Bank. It trades about 0.03 of its potential returns per unit of risk. Metropolitan Bank Holding is currently generating about -0.15 per unit of risk. If you would invest 1,109 in Bridgewater Bancshares on January 18, 2024 and sell it today you would earn a total of 8.00 from holding Bridgewater Bancshares or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bridgewater Bancshares vs. Metropolitan Bank Holding
Performance |
| Timeline |
| Bridgewater Bancshares |
| Metropolitan Bank Holding |
Bridgewater Bancshares and Metropolitan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgewater Bancshares and Metropolitan Bank
The main advantage of trading using opposite Bridgewater Bancshares and Metropolitan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgewater Bancshares position performs unexpectedly, Metropolitan 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 Metropolitan Bank will offset losses from the drop in Metropolitan Bank's long position.| Bridgewater Bancshares vs. National Bank Holdings | Bridgewater Bancshares vs. Community West Bancshares | Bridgewater Bancshares vs. First Capital | Bridgewater Bancshares vs. BCB 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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