Correlation Between ESSA Bancorp and Banc Of
Can any of the company-specific risk be diversified away by investing in both ESSA Bancorp and Banc Of 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 ESSA Bancorp and Banc Of into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSA Bancorp and Banc of California,, you can compare the effects of market volatilities on ESSA Bancorp and Banc Of 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 ESSA Bancorp with a short position of Banc Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSA Bancorp and Banc Of.
Diversification Opportunities for ESSA Bancorp and Banc Of
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ESSA and Banc is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ESSA Bancorp and Banc of California, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banc of California, and ESSA 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 ESSA Bancorp are associated (or correlated) with Banc Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banc of California, has no effect on the direction of ESSA Bancorp i.e., ESSA Bancorp and Banc Of go up and down completely randomly.
Pair Corralation between ESSA Bancorp and Banc Of
Given the investment horizon of 90 days ESSA Bancorp is expected to generate 1.52 times less return on investment than Banc Of. But when comparing it to its historical volatility, ESSA Bancorp is 1.2 times less risky than Banc Of. It trades about 0.16 of its potential returns per unit of risk. Banc of California, is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,584 in Banc of California, on August 28, 2024 and sell it today you would earn a total of 193.00 from holding Banc of California, or generate 12.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESSA Bancorp vs. Banc of California,
Performance |
| Timeline |
| ESSA Bancorp |
| Banc of California, |
ESSA Bancorp and Banc Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESSA Bancorp and Banc Of
The main advantage of trading using opposite ESSA Bancorp and Banc Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSA Bancorp position performs unexpectedly, Banc Of 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 Banc Of will offset losses from the drop in Banc Of's long position.| ESSA Bancorp vs. Community West Bancshares | ESSA Bancorp vs. First Northwest Bancorp | ESSA Bancorp vs. First Community | ESSA Bancorp vs. Oak Valley Bancorp |
| Banc Of vs. Peapack Gladstone Financial | Banc Of vs. Northfield Bancorp | Banc Of vs. Great Southern Bancorp | Banc Of vs. Heritage 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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