Correlation Between Bridgewater Bancshares and Associated Banc

Can any of the company-specific risk be diversified away by investing in both Bridgewater Bancshares 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 Bridgewater Bancshares and Associated Banc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bridgewater Bancshares Depositary and Associated Banc Corp, you can compare the effects of market volatilities on Bridgewater Bancshares 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 Bridgewater Bancshares with a short position of Associated Banc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgewater Bancshares and Associated Banc.

Diversification Opportunities for Bridgewater Bancshares and Associated Banc

0.66

Correlation Coefficient

Bridgewater Bancshares  Associated Banc

Poor diversification

The 3 months correlation between Bridgewater and Associated is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bridgewater Bancshares Deposit 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 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 Depositary 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 Bridgewater Bancshares i.e., Bridgewater Bancshares and Associated Banc go up and down completely randomly.

Pair Corralation between Bridgewater Bancshares and Associated Banc

Assuming the 90 days horizon Bridgewater Bancshares Depositary is expected to generate 1.71 times more return on investment than Associated Banc. However, Bridgewater Bancshares is 1.71 times more volatile than Associated Banc Corp. It trades about 0.15 of its potential returns per unit of risk. Associated Banc Corp is currently generating about 0.19 per unit of risk. If you would invest  1,859  in Bridgewater Bancshares Depositary on May 6, 2025 and sell it today you would earn a total of  237.00  from holding Bridgewater Bancshares Depositary or generate 12.75% return on investment over 90 days.

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

Bridgewater Bancshares Deposit  vs.  Associated Banc Corp

Bridgewater Bancshares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgewater Bancshares Depositary are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Bridgewater Bancshares reported solid returns over the last few months and may actually be approaching a breakup point.

Associated Banc Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Banc Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental drivers, Associated Banc may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Bridgewater Bancshares and Associated Banc

The main advantage of trading using opposite Bridgewater Bancshares and Associated Banc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgewater Bancshares 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.

The idea behind Bridgewater Bancshares Depositary and Associated Banc Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.