Correlation Between Amalgamated Bank and Cadence Bancorp

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

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

Diversification Opportunities for Amalgamated Bank and Cadence Bancorp

0.26

Correlation Coefficient

Amalgamated Bank  Cadence Bancorp

Modest diversification

The 3 months correlation between Amalgamated and Cadence is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Amalgamated Bank and Cadence Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Bancorp and Amalgamated Bank 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 Amalgamated Bank are associated (or correlated) with Cadence Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Bancorp has no effect on the direction of Amalgamated Bank i.e., Amalgamated Bank and Cadence Bancorp go up and down completely randomly.

Pair Corralation between Amalgamated Bank and Cadence Bancorp

Given the investment horizon of 90 days Amalgamated Bank is expected to under-perform the Cadence Bancorp. In addition to that, Amalgamated Bank is 1.09 times more volatile than Cadence Bancorp. It trades about -0.02 of its total potential returns per unit of risk. Cadence Bancorp is currently generating about 0.12 per unit of volatility. If you would invest  3,175  in Cadence Bancorp on May 15, 2025 and sell it today you would earn a total of  436.00  from holding Cadence Bancorp or generate 13.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Amalgamated Bank  vs.  Cadence Bancorp

Amalgamated Bank

Risk-Adjusted Performance

Weakest

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

Cadence Bancorp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Cadence Bancorp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Cadence Bancorp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amalgamated Bank and Cadence Bancorp

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

The idea behind Amalgamated Bank and Cadence 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.