Correlation Between Triad Business and Century Next

Can any of the company-specific risk be diversified away by investing in both Triad Business and Century Next 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 Triad Business and Century Next into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Triad Business and Century Next

-0.75

Correlation Coefficient

Triad Business  Century Next

Pay attention - limited upside

The 3 months correlation between Triad and Century is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Triad Business Bank and Century Next Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Next Financial and Triad Business 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 Triad Business Bank are associated (or correlated) with Century Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Next Financial has no effect on the direction of Triad Business i.e., Triad Business and Century Next go up and down completely randomly.

Pair Corralation between Triad Business and Century Next

Given the investment horizon of 90 days Triad Business Bank is expected to under-perform the Century Next. In addition to that, Triad Business is 1.82 times more volatile than Century Next Financial. It trades about -0.15 of its total potential returns per unit of risk. Century Next Financial is currently generating about 0.02 per unit of volatility. If you would invest  3,825  in Century Next Financial on September 13, 2024 and sell it today you would earn a total of  6.00  from holding Century Next Financial or generate 0.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Triad Business Bank  vs.  Century Next Financial

Triad Business Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triad Business Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Triad Business is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Century Next Financial

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Century Next Financial are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Century Next showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Triad Business and Century Next

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

The idea behind Triad Business Bank and Century Next Financial 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.