Correlation Between Affinity Bancshares and Sound Financial
Can any of the company-specific risk be diversified away by investing in both Affinity Bancshares and Sound 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 Affinity Bancshares and Sound Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affinity Bancshares and Sound Financial Bancorp, you can compare the effects of market volatilities on Affinity Bancshares and Sound 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 Affinity Bancshares with a short position of Sound Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affinity Bancshares and Sound Financial.
Diversification Opportunities for Affinity Bancshares and Sound Financial
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Affinity and Sound is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Affinity Bancshares and Sound Financial Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Financial Bancorp and Affinity 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 Affinity Bancshares are associated (or correlated) with Sound Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Financial Bancorp has no effect on the direction of Affinity Bancshares i.e., Affinity Bancshares and Sound Financial go up and down completely randomly.
Pair Corralation between Affinity Bancshares and Sound Financial
Given the investment horizon of 90 days Affinity Bancshares is expected to generate 1.13 times more return on investment than Sound Financial. However, Affinity Bancshares is 1.13 times more volatile than Sound Financial Bancorp. It trades about 0.06 of its potential returns per unit of risk. Sound Financial Bancorp is currently generating about -0.17 per unit of risk. If you would invest 1,836 in Affinity Bancshares on November 18, 2024 and sell it today you would earn a total of 17.00 from holding Affinity Bancshares or generate 0.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Affinity Bancshares vs. Sound Financial Bancorp
Performance |
| Timeline |
| Affinity Bancshares |
| Sound Financial Bancorp |
Affinity Bancshares and Sound Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affinity Bancshares and Sound Financial
The main advantage of trading using opposite Affinity Bancshares and Sound Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affinity Bancshares position performs unexpectedly, Sound 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 Sound Financial will offset losses from the drop in Sound Financial's long position.| Affinity Bancshares vs. Home Federal Bancorp | Affinity Bancshares vs. Magyar Bancorp | Affinity Bancshares vs. Community West Bancshares |
| Sound Financial vs. Finward Bancorp | Sound Financial vs. Franklin Financial Services | Sound Financial vs. Community West Bancshares | Sound Financial vs. Home Federal Bancorp |
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 the FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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