Correlation Between Southern California and ECB Bancorp
Can any of the company-specific risk be diversified away by investing in both Southern California and ECB 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 Southern California and ECB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern California Bancorp and ECB Bancorp, you can compare the effects of market volatilities on Southern California and ECB 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 Southern California with a short position of ECB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern California and ECB Bancorp.
Diversification Opportunities for Southern California and ECB Bancorp
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Southern and ECB is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Southern California Bancorp and ECB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECB Bancorp and Southern California 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 Southern California Bancorp are associated (or correlated) with ECB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECB Bancorp has no effect on the direction of Southern California i.e., Southern California and ECB Bancorp go up and down completely randomly.
Pair Corralation between Southern California and ECB Bancorp
Given the investment horizon of 90 days Southern California is expected to generate 1.03 times less return on investment than ECB Bancorp. In addition to that, Southern California is 1.07 times more volatile than ECB Bancorp. It trades about 0.11 of its total potential returns per unit of risk. ECB Bancorp is currently generating about 0.13 per unit of volatility. If you would invest 1,158 in ECB Bancorp on September 3, 2024 and sell it today you would earn a total of 341.00 from holding ECB Bancorp or generate 29.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern California Bancorp vs. ECB Bancorp
Performance |
| Timeline |
| Southern California |
| ECB Bancorp |
Southern California and ECB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern California and ECB Bancorp
The main advantage of trading using opposite Southern California and ECB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern California position performs unexpectedly, ECB 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 ECB Bancorp will offset losses from the drop in ECB Bancorp's long position.| Southern California vs. Avidbank Holdings | Southern California vs. American Riviera Bank | Southern California vs. American Business Bk | Southern California vs. Private Bancorp of |
| ECB Bancorp vs. JPMorgan Chase Co | ECB Bancorp vs. Citigroup | ECB Bancorp vs. Wells Fargo | ECB Bancorp vs. Toronto Dominion Bank |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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