Correlation Between ECB Bancorp and SB Financial
Can any of the company-specific risk be diversified away by investing in both ECB Bancorp and SB Financial 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 ECB Bancorp and SB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECB Bancorp and SB Financial Group, you can compare the effects of market volatilities on ECB Bancorp and SB Financial 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 ECB Bancorp with a short position of SB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECB Bancorp and SB Financial.
Diversification Opportunities for ECB Bancorp and SB Financial
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between ECB and SBFG is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding ECB Bancorp and SB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SB Financial Group and ECB 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 ECB Bancorp are associated (or correlated) with SB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SB Financial Group has no effect on the direction of ECB Bancorp i.e., ECB Bancorp and SB Financial go up and down completely randomly.
Pair Corralation between ECB Bancorp and SB Financial
Given the investment horizon of 90 days ECB Bancorp is expected to generate 0.71 times more return on investment than SB Financial. However, ECB Bancorp is 1.41 times less risky than SB Financial. It trades about 0.43 of its potential returns per unit of risk. SB Financial Group is currently generating about -0.1 per unit of risk. If you would invest 1,316 in ECB Bancorp on November 29, 2024 and sell it today you would earn a total of 155.00 from holding ECB Bancorp or generate 11.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECB Bancorp vs. SB Financial Group
Performance |
| Timeline |
| ECB Bancorp |
| SB Financial Group |
ECB Bancorp and SB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECB Bancorp and SB Financial
The main advantage of trading using opposite ECB Bancorp and SB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECB Bancorp position performs unexpectedly, SB Financial 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 SB Financial will offset losses from the drop in SB Financial's long position.| ECB Bancorp vs. Home Federal Bancorp | ECB Bancorp vs. Magyar Bancorp | ECB Bancorp vs. Community West Bancshares | ECB Bancorp vs. Lake Shore Bancorp |
| SB Financial vs. Home Federal Bancorp | SB Financial vs. Lake Shore Bancorp | SB Financial vs. National Bankshares | SB Financial vs. Sound Financial 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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