Correlation Between International Bancshares and Camden National

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

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

Diversification Opportunities for International Bancshares and Camden National

0.96

Correlation Coefficient

International Bancshares  Camden National

Almost no diversification

The 3 months correlation between International and Camden is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding International Bancshares and Camden National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camden National and International 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 International Bancshares are associated (or correlated) with Camden National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camden National has no effect on the direction of International Bancshares i.e., International Bancshares and Camden National go up and down completely randomly.

Pair Corralation between International Bancshares and Camden National

Given the investment horizon of 90 days International Bancshares is expected to generate 1.31 times less return on investment than Camden National. But when comparing it to its historical volatility, International Bancshares is 1.02 times less risky than Camden National. It trades about 0.12 of its potential returns per unit of risk. Camden National is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,732  in Camden National on September 12, 2024 and sell it today you would earn a total of  977.00  from holding Camden National or generate 26.18% return on investment over 90 days.

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

International Bancshares  vs.  Camden National

International Bancshares

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Bancshares are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, International Bancshares exhibited solid returns over the last few months and may actually be approaching a breakup point.

Camden National

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Camden National are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Camden National exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Bancshares and Camden National

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

The idea behind International Bancshares and Camden National 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.