Correlation Between Sierra Bancorp and Horizon Bancorp
Can any of the company-specific risk be diversified away by investing in both Sierra Bancorp and Horizon 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 Sierra Bancorp and Horizon Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sierra Bancorp and Horizon Bancorp, you can compare the effects of market volatilities on Sierra Bancorp and Horizon 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 Sierra Bancorp with a short position of Horizon Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra Bancorp and Horizon Bancorp.
Diversification Opportunities for Sierra Bancorp and Horizon Bancorp
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sierra and Horizon is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sierra Bancorp and Horizon Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Bancorp 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 Horizon Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Bancorp has no effect on the direction of Sierra Bancorp i.e., Sierra Bancorp and Horizon Bancorp go up and down completely randomly.
Pair Corralation between Sierra Bancorp and Horizon Bancorp
Given the investment horizon of 90 days Sierra Bancorp is expected to generate 1.06 times more return on investment than Horizon Bancorp. However, Sierra Bancorp is 1.06 times more volatile than Horizon Bancorp. It trades about 0.1 of its potential returns per unit of risk. Horizon Bancorp is currently generating about 0.1 per unit of risk. If you would invest 1,745 in Sierra Bancorp on August 24, 2024 and sell it today you would earn a total of 1,427 from holding Sierra Bancorp or generate 81.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sierra Bancorp vs. Horizon Bancorp
Performance |
| Timeline |
| Sierra Bancorp |
| Horizon Bancorp |
Sierra Bancorp and Horizon Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sierra Bancorp and Horizon Bancorp
The main advantage of trading using opposite Sierra Bancorp and Horizon Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sierra Bancorp position performs unexpectedly, Horizon 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 Horizon Bancorp will offset losses from the drop in Horizon Bancorp'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 |
| Horizon Bancorp vs. Community West Bancshares | Horizon Bancorp vs. Heritage Financial | Horizon Bancorp vs. First Financial Northwest | Horizon Bancorp vs. Sierra 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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