Correlation Between Sierra Bancorp and Flexsteel Industries
Can any of the company-specific risk be diversified away by investing in both Sierra Bancorp and Flexsteel Industries 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 Flexsteel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sierra Bancorp and Flexsteel Industries, you can compare the effects of market volatilities on Sierra Bancorp and Flexsteel Industries 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 Flexsteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra Bancorp and Flexsteel Industries.
Diversification Opportunities for Sierra Bancorp and Flexsteel Industries
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sierra and Flexsteel is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sierra Bancorp and Flexsteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexsteel Industries 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 Flexsteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexsteel Industries has no effect on the direction of Sierra Bancorp i.e., Sierra Bancorp and Flexsteel Industries go up and down completely randomly.
Pair Corralation between Sierra Bancorp and Flexsteel Industries
Given the investment horizon of 90 days Sierra Bancorp is expected to generate 2.84 times less return on investment than Flexsteel Industries. But when comparing it to its historical volatility, Sierra Bancorp is 1.52 times less risky than Flexsteel Industries. It trades about 0.05 of its potential returns per unit of risk. Flexsteel Industries is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,424 in Flexsteel Industries on August 28, 2024 and sell it today you would earn a total of 4,513 from holding Flexsteel Industries or generate 316.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sierra Bancorp vs. Flexsteel Industries
Performance |
| Timeline |
| Sierra Bancorp |
| Flexsteel Industries |
Sierra Bancorp and Flexsteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sierra Bancorp and Flexsteel Industries
The main advantage of trading using opposite Sierra Bancorp and Flexsteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sierra Bancorp position performs unexpectedly, Flexsteel Industries 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 Flexsteel Industries will offset losses from the drop in Flexsteel Industries' 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 |
| Flexsteel Industries vs. Willis Lease Finance | Flexsteel Industries vs. Rocky Brands | Flexsteel Industries vs. First Business Financial |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |