Correlation Between Sierra Bancorp and Timberland Bancorp
Can any of the company-specific risk be diversified away by investing in both Sierra Bancorp and Timberland 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 Timberland 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 Timberland Bancorp, you can compare the effects of market volatilities on Sierra Bancorp and Timberland 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 Timberland Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra Bancorp and Timberland Bancorp.
Diversification Opportunities for Sierra Bancorp and Timberland Bancorp
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sierra and Timberland is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sierra Bancorp and Timberland Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timberland 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 Timberland Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timberland Bancorp has no effect on the direction of Sierra Bancorp i.e., Sierra Bancorp and Timberland Bancorp go up and down completely randomly.
Pair Corralation between Sierra Bancorp and Timberland Bancorp
Given the investment horizon of 90 days Sierra Bancorp is expected to generate 1.22 times more return on investment than Timberland Bancorp. However, Sierra Bancorp is 1.22 times more volatile than Timberland Bancorp. It trades about 0.07 of its potential returns per unit of risk. Timberland Bancorp is currently generating about 0.03 per unit of risk. If you would invest 1,534 in Sierra Bancorp on December 1, 2024 and sell it today you would earn a total of 1,538 from holding Sierra Bancorp or generate 100.26% 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. Timberland Bancorp
Performance |
| Timeline |
| Sierra Bancorp |
| Timberland Bancorp |
Sierra Bancorp and Timberland Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sierra Bancorp and Timberland Bancorp
The main advantage of trading using opposite Sierra Bancorp and Timberland Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sierra Bancorp position performs unexpectedly, Timberland 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 Timberland Bancorp will offset losses from the drop in Timberland 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 |
| Timberland Bancorp vs. First Financial Northwest | Timberland Bancorp vs. FVCBankcorp | Timberland Bancorp vs. Community West Bancshares | Timberland 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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