Correlation Between Banc Of and Heritage Financial
Can any of the company-specific risk be diversified away by investing in both Banc Of and Heritage 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 Banc Of and Heritage Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banc of California and Heritage Financial, you can compare the effects of market volatilities on Banc Of and Heritage 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 Banc Of with a short position of Heritage Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banc Of and Heritage Financial.
Diversification Opportunities for Banc Of and Heritage Financial
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Banc and Heritage is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Banc of California and Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Financial and Banc Of 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 Banc of California are associated (or correlated) with Heritage Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Financial has no effect on the direction of Banc Of i.e., Banc Of and Heritage Financial go up and down completely randomly.
Pair Corralation between Banc Of and Heritage Financial
Assuming the 90 days trading horizon Banc Of is expected to generate 2.65 times less return on investment than Heritage Financial. But when comparing it to its historical volatility, Banc of California is 4.07 times less risky than Heritage Financial. It trades about 0.1 of its potential returns per unit of risk. Heritage Financial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,108 in Heritage Financial on December 25, 2024 and sell it today you would earn a total of 315.00 from holding Heritage Financial or generate 14.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banc of California vs. Heritage Financial
Performance |
| Timeline |
| Banc of California |
| Heritage Financial |
Banc Of and Heritage Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banc Of and Heritage Financial
The main advantage of trading using opposite Banc Of and Heritage Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banc Of position performs unexpectedly, Heritage 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 Heritage Financial will offset losses from the drop in Heritage Financial's long position.| Banc Of vs. Altria Group | Banc Of vs. Harmony Gold Mining | Banc Of vs. RLX Technology | Banc Of vs. Magna Mining |
| Heritage Financial vs. Heritage Commerce Corp | Heritage Financial vs. Horizon Bancorp | Heritage Financial vs. Independent Bank | Heritage Financial vs. Great Southern 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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