Correlation Between Riverview Bancorp and Provident Financial

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

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

Diversification Opportunities for Riverview Bancorp and Provident Financial

0.0

Correlation Coefficient

Riverview Bancorp  Provident Financial

Pay attention - limited upside

The 3 months correlation between Riverview and Provident is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Riverview Bancorp and Provident Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provident Financial and Riverview Bancorp 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 Riverview Bancorp are associated (or correlated) with Provident Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provident Financial has no effect on the direction of Riverview Bancorp i.e., Riverview Bancorp and Provident Financial go up and down completely randomly.

Pair Corralation between Riverview Bancorp and Provident Financial

If you would invest (100.00) in Provident Financial Holdings on August 14, 2024 and sell it today you would earn a total of  100.00  from holding Provident Financial Holdings or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Riverview Bancorp  vs.  Provident Financial Holdings

Riverview Bancorp

Risk-Adjusted Performance

0 of 100

OK

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

Provident Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Provident Financial Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Provident Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Riverview Bancorp and Provident Financial

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

The idea behind Riverview Bancorp and Provident Financial Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.