Correlation Between Auburn National and Pacific Premier
Can any of the company-specific risk be diversified away by investing in both Auburn National and Pacific Premier 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 Auburn National and Pacific Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auburn National Bancorporation and Pacific Premier Bancorp, you can compare the effects of market volatilities on Auburn National and Pacific Premier 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 Auburn National with a short position of Pacific Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auburn National and Pacific Premier.
Diversification Opportunities for Auburn National and Pacific Premier
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Auburn and Pacific is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Auburn National Bancorp. and Pacific Premier Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Premier Bancorp and Auburn National 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 Auburn National Bancorporation are associated (or correlated) with Pacific Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Premier Bancorp has no effect on the direction of Auburn National i.e., Auburn National and Pacific Premier go up and down completely randomly.
Pair Corralation between Auburn National and Pacific Premier
Given the investment horizon of 90 days Auburn National is expected to generate 1.18 times less return on investment than Pacific Premier. In addition to that, Auburn National is 1.02 times more volatile than Pacific Premier Bancorp. It trades about 0.06 of its total potential returns per unit of risk. Pacific Premier Bancorp is currently generating about 0.08 per unit of volatility. If you would invest 2,172 in Pacific Premier Bancorp on September 3, 2024 and sell it today you would earn a total of 668.00 from holding Pacific Premier Bancorp or generate 30.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auburn National Bancorp. vs. Pacific Premier Bancorp
Performance |
| Timeline |
| Auburn National Banc |
| Pacific Premier Bancorp |
Auburn National and Pacific Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auburn National and Pacific Premier
The main advantage of trading using opposite Auburn National and Pacific Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auburn National position performs unexpectedly, Pacific Premier 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 Pacific Premier will offset losses from the drop in Pacific Premier's long position.| Auburn National vs. Home Federal Bancorp | Auburn National vs. LINKBANCORP | Auburn National vs. Affinity Bancshares | Auburn National vs. Southern California Bancorp |
| Pacific Premier vs. Community West Bancshares | Pacific Premier vs. Heritage Financial | Pacific Premier vs. First Financial Northwest | Pacific Premier vs. Sierra 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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