Correlation Between Sierra Bancorp and Capitol Federal
Can any of the company-specific risk be diversified away by investing in both Sierra Bancorp and Capitol Federal 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 Sierra Bancorp and Capitol Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sierra Bancorp and Capitol Federal Financial, you can compare the effects of market volatilities on Sierra Bancorp and Capitol Federal 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 Sierra Bancorp with a short position of Capitol Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra Bancorp and Capitol Federal.
Diversification Opportunities for Sierra Bancorp and Capitol Federal
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sierra and Capitol is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sierra Bancorp and Capitol Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Federal Financial and Sierra Bancorp 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 Sierra Bancorp are associated (or correlated) with Capitol Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Federal Financial has no effect on the direction of Sierra Bancorp i.e., Sierra Bancorp and Capitol Federal go up and down completely randomly.
Pair Corralation between Sierra Bancorp and Capitol Federal
Given the investment horizon of 90 days Sierra Bancorp is expected to generate 1.64 times more return on investment than Capitol Federal. However, Sierra Bancorp is 1.64 times more volatile than Capitol Federal Financial. It trades about 0.11 of its potential returns per unit of risk. Capitol Federal Financial is currently generating about 0.07 per unit of risk. If you would invest 2,870 in Sierra Bancorp on August 31, 2024 and sell it today you would earn a total of 277.00 from holding Sierra Bancorp or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sierra Bancorp vs. Capitol Federal Financial
Performance |
| Timeline |
| Sierra Bancorp |
| Capitol Federal Financial |
Sierra Bancorp and Capitol Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sierra Bancorp and Capitol Federal
The main advantage of trading using opposite Sierra Bancorp and Capitol Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sierra Bancorp position performs unexpectedly, Capitol Federal 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 Capitol Federal will offset losses from the drop in Capitol Federal's long position.| Sierra Bancorp vs. Home Federal Bancorp | Sierra Bancorp vs. First Financial Northwest | Sierra Bancorp vs. First Northwest Bancorp | Sierra Bancorp vs. First Capital |
| Capitol Federal vs. Independent Bank | Capitol Federal vs. BankFinancial | Capitol Federal vs. Business First Bancshares | Capitol Federal vs. First 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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