Correlation Between Banco DE and Bar Harbor

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Can any of the company-specific risk be diversified away by investing in both Banco DE and Bar Harbor 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 Banco DE and Bar Harbor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco DE Chile and Bar Harbor Bankshares, you can compare the effects of market volatilities on Banco DE and Bar Harbor 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 Banco DE with a short position of Bar Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco DE and Bar Harbor.

Diversification Opportunities for Banco DE and Bar Harbor

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Banco and Bar Harbor is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Banco DE Chile and Bar Harbor Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bar Harbor Bankshares and Banco DE 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 Banco DE Chile are associated (or correlated) with Bar Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bar Harbor Bankshares has no effect on the direction of Banco DE i.e., Banco DE and Bar Harbor go up and down completely randomly.

Pair Corralation between Banco DE and Bar Harbor

Considering the 90-day investment horizon Banco DE Chile is expected to generate 1.23 times more return on investment than Bar Harbor. However, Banco DE is 1.23 times more volatile than Bar Harbor Bankshares. It trades about 0.02 of its potential returns per unit of risk. Bar Harbor Bankshares is currently generating about 0.0 per unit of risk. If you would invest  1,635  in Banco DE Chile on April 6, 2022 and sell it today you would earn a total of  110.00  from holding Banco DE Chile or generate 6.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Banco DE Chile  vs.  Bar Harbor Bankshares

 Performance (%) 
      Timeline 
Banco DE Chile 
Banco Performance
0 of 100
Over the last 90 days Banco DE Chile has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in August 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0751
Payout Ratio
0.59
Last Split Factor
3:1
Forward Annual Dividend Rate
1.37
Dividend Date
2022-04-07
Ex Dividend Date
2022-03-28
Last Split Date
2018-11-23

Banco Price Channel

Bar Harbor Bankshares 
Bar Harbor Performance
0 of 100
Over the last 90 days Bar Harbor Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, Bar Harbor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0393
Payout Ratio
0.37
Last Split Factor
3:2
Forward Annual Dividend Rate
1.04
Dividend Date
2022-06-17
Ex Dividend Date
2022-05-16
Last Split Date
2017-03-22

Bar Harbor Price Channel

Banco DE and Bar Harbor Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Banco DE and Bar Harbor

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

Banco DE Chile

Pair trading matchups for Banco DE

Definitive Healthcare vs. Banco DE
Ultrashort MSCI vs. Banco DE
Kimball Electrnc vs. Banco DE
Microsoft Corp vs. Banco DE
Ollies Bargain vs. Banco DE
Walker Dunlop vs. Banco DE
Visa vs. Banco DE
Twitter vs. Banco DE
Vmware vs. Banco DE
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Banco DE as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Banco DE's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Banco DE's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Banco DE Chile.
The idea behind Banco DE Chile and Bar Harbor Bankshares 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.

Bar Harbor Bankshares

Pair trading matchups for Bar Harbor

Microsoft Corp vs. Bar Harbor
Kimball Electrnc vs. Bar Harbor
Visa vs. Bar Harbor
Chemocentryx vs. Bar Harbor
Kura Oncology vs. Bar Harbor
Citigroup vs. Bar Harbor
Bidvest vs. Bar Harbor
Ultrashort MSCI vs. Bar Harbor
Dupont Denemours vs. Bar Harbor
Twitter vs. Bar Harbor
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Bar Harbor as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Bar Harbor's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Bar Harbor's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Bar Harbor Bankshares.
Check out your portfolio center. 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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