Correlation Between American Riviera and Blackhawk Bancorp

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

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

Diversification Opportunities for American Riviera and Blackhawk Bancorp

0.23

Correlation Coefficient

American Riviera  Blackhawk Bancorp

Modest diversification

The 3 months correlation between American and Blackhawk is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding American Riviera Bank and Blackhawk Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackhawk Bancorp and American Riviera 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 American Riviera Bank are associated (or correlated) with Blackhawk Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackhawk Bancorp has no effect on the direction of American Riviera i.e., American Riviera and Blackhawk Bancorp go up and down completely randomly.

Pair Corralation between American Riviera and Blackhawk Bancorp

Given the investment horizon of 90 days American Riviera is expected to generate 2.43 times less return on investment than Blackhawk Bancorp. In addition to that, American Riviera is 1.09 times more volatile than Blackhawk Bancorp. It trades about 0.03 of its total potential returns per unit of risk. Blackhawk Bancorp is currently generating about 0.07 per unit of volatility. If you would invest  2,975  in Blackhawk Bancorp on September 13, 2024 and sell it today you would earn a total of  375.00  from holding Blackhawk Bancorp or generate 12.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	29.35%
Values	Daily Returns

American Riviera Bank  vs.  Blackhawk Bancorp

American Riviera Bank

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Riviera Bank are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, American Riviera may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Blackhawk Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackhawk Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Blackhawk Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Riviera and Blackhawk Bancorp

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

The idea behind American Riviera Bank and Blackhawk 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.