Correlation Between Equity Bancshares and Brookline Bancorp

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

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

Diversification Opportunities for Equity Bancshares and Brookline Bancorp

-0.38

Correlation Coefficient

Equity Bancshares  Brookline Bancorp

Very good diversification

The 3 months correlation between Equity and Brookline is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Equity Bancshares and Brookline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookline Bancorp and Equity 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 Equity Bancshares are associated (or correlated) with Brookline Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookline Bancorp has no effect on the direction of Equity Bancshares i.e., Equity Bancshares and Brookline Bancorp go up and down completely randomly.

Pair Corralation between Equity Bancshares and Brookline Bancorp

Given the investment horizon of 90 days Equity Bancshares is expected to generate 0.61 times more return on investment than Brookline Bancorp. However, Equity Bancshares is 1.64 times less risky than Brookline Bancorp. It trades about -0.02 of its potential returns per unit of risk. Brookline Bancorp is currently generating about -0.22 per unit of risk. If you would invest  3,364  in Equity Bancshares on February 1, 2024 and sell it today you would lose (33.00) from holding Equity Bancshares or give up 0.98% of portfolio value over 90 days.

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

Equity Bancshares  vs.  Brookline Bancorp

Equity Bancshares

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Bancshares are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Equity Bancshares is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Brookline Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brookline Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Equity Bancshares and Brookline Bancorp

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

The idea behind Equity Bancshares and Brookline 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.