Correlation Between Community Trust and Pacific Premier
Can any of the company-specific risk be diversified away by investing in both Community Trust and Pacific Premier 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 Community Trust and Pacific Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Community Trust Bancorp and Pacific Premier Bancorp, you can compare the effects of market volatilities on Community Trust and Pacific Premier 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 Community Trust with a short position of Pacific Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Trust and Pacific Premier.
Diversification Opportunities for Community Trust and Pacific Premier
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Community and Pacific is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Community Trust Bancorp and Pacific Premier Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Premier Bancorp and Community Trust 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 Community Trust Bancorp are associated (or correlated) with Pacific Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Premier Bancorp has no effect on the direction of Community Trust i.e., Community Trust and Pacific Premier go up and down completely randomly.
Pair Corralation between Community Trust and Pacific Premier
Given the investment horizon of 90 days Community Trust is expected to generate 1.08 times less return on investment than Pacific Premier. In addition to that, Community Trust is 1.03 times more volatile than Pacific Premier Bancorp. It trades about 0.14 of its total potential returns per unit of risk. Pacific Premier Bancorp is currently generating about 0.16 per unit of volatility. If you would invest 2,555 in Pacific Premier Bancorp on August 31, 2024 and sell it today you would earn a total of 318.00 from holding Pacific Premier Bancorp or generate 12.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Community Trust Bancorp vs. Pacific Premier Bancorp
Performance |
| Timeline |
| Community Trust Bancorp |
| Pacific Premier Bancorp |
Community Trust and Pacific Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community Trust and Pacific Premier
The main advantage of trading using opposite Community Trust and Pacific Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Trust position performs unexpectedly, Pacific Premier 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 Pacific Premier will offset losses from the drop in Pacific Premier's long position.| Community Trust vs. Home Bancorp | Community Trust vs. Heritage Financial | Community Trust vs. First Northwest Bancorp | Community Trust vs. HomeTrust Bancshares |
| Pacific Premier vs. KeyCorp | Pacific Premier vs. Comerica | Pacific Premier vs. First Horizon National | Pacific Premier vs. Western Alliance Bancorporation |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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