Correlation Between Southern California and Northeast Community
Can any of the company-specific risk be diversified away by investing in both Southern California and Northeast Community 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 Northeast Community 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 Northeast Community Bancorp, you can compare the effects of market volatilities on Southern California and Northeast Community 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 Northeast Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern California and Northeast Community.
Diversification Opportunities for Southern California and Northeast Community
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southern and Northeast is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Southern California Bancorp and Northeast Community Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast Community 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 Northeast Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Community has no effect on the direction of Southern California i.e., Southern California and Northeast Community go up and down completely randomly.
Pair Corralation between Southern California and Northeast Community
Given the investment horizon of 90 days Southern California is expected to generate 6.33 times less return on investment than Northeast Community. But when comparing it to its historical volatility, Southern California Bancorp is 1.02 times less risky than Northeast Community. It trades about 0.02 of its potential returns per unit of risk. Northeast Community Bancorp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,383 in Northeast Community Bancorp on September 3, 2024 and sell it today you would earn a total of 1,632 from holding Northeast Community Bancorp or generate 118.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern California Bancorp vs. Northeast Community Bancorp
Performance |
| Timeline |
| Southern California |
| Northeast Community |
Southern California and Northeast Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern California and Northeast Community
The main advantage of trading using opposite Southern California and Northeast Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern California position performs unexpectedly, Northeast Community 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 Northeast Community will offset losses from the drop in Northeast Community'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 |
| Northeast Community vs. Community West Bancshares | Northeast Community vs. First Financial Northwest | Northeast Community vs. First Capital | Northeast Community vs. HomeTrust Bancshares |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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