Correlation Between Tectonic Financial and Valley National

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Can any of the company-specific risk be diversified away by investing in both Tectonic Financial and Valley National 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 Tectonic Financial and Valley National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tectonic Financial PR and Valley National Bancorp, you can compare the effects of market volatilities on Tectonic Financial and Valley National 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 Tectonic Financial with a short position of Valley National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tectonic Financial and Valley National.

Diversification Opportunities for Tectonic Financial and Valley National

-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Tectonic and Valley is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Financial PR and Valley National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valley National Bancorp and Tectonic Financial 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 Tectonic Financial PR are associated (or correlated) with Valley National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valley National Bancorp has no effect on the direction of Tectonic Financial i.e., Tectonic Financial and Valley National go up and down completely randomly.

Pair Corralation between Tectonic Financial and Valley National

Assuming the 90 days horizon Tectonic Financial PR is expected to generate 0.15 times more return on investment than Valley National. However, Tectonic Financial PR is 6.82 times less risky than Valley National. It trades about 0.15 of its potential returns per unit of risk. Valley National Bancorp is currently generating about 0.0 per unit of risk. If you would invest  984.00  in Tectonic Financial PR on February 7, 2024 and sell it today you would earn a total of  41.00  from holding Tectonic Financial PR or generate 4.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Tectonic Financial PR  vs.  Valley National Bancorp

 Performance 
       Timeline  
Tectonic Financial 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Tectonic Financial PR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Tectonic Financial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Valley National Bancorp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Valley National Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Valley National is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Tectonic Financial and Valley National Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tectonic Financial and Valley National

The main advantage of trading using opposite Tectonic Financial and Valley National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tectonic Financial position performs unexpectedly, Valley National 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 Valley National will offset losses from the drop in Valley National's long position.
The idea behind Tectonic Financial PR and Valley National 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.
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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