Correlation Between ESSA Bancorp and Pacific Premier
Can any of the company-specific risk be diversified away by investing in both ESSA Bancorp 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 ESSA Bancorp and Pacific Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSA Bancorp and Pacific Premier Bancorp, you can compare the effects of market volatilities on ESSA Bancorp 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 ESSA Bancorp with a short position of Pacific Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSA Bancorp and Pacific Premier.
Diversification Opportunities for ESSA Bancorp and Pacific Premier
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ESSA and Pacific is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ESSA 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 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 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 ESSA Bancorp i.e., ESSA Bancorp and Pacific Premier go up and down completely randomly.
Pair Corralation between ESSA Bancorp and Pacific Premier
Given the investment horizon of 90 days ESSA Bancorp is expected to generate 1.62 times less return on investment than Pacific Premier. But when comparing it to its historical volatility, ESSA Bancorp is 1.56 times less risky than Pacific Premier. It trades about 0.16 of its potential returns per unit of risk. Pacific Premier Bancorp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,585 in Pacific Premier Bancorp on August 27, 2024 and sell it today you would earn a total of 326.00 from holding Pacific Premier Bancorp or generate 12.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESSA Bancorp vs. Pacific Premier Bancorp
Performance |
| Timeline |
| ESSA Bancorp |
| Pacific Premier Bancorp |
ESSA Bancorp and Pacific Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESSA Bancorp and Pacific Premier
The main advantage of trading using opposite ESSA Bancorp and Pacific Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSA Bancorp 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.| ESSA Bancorp vs. Fifth Third Bancorp | ESSA Bancorp vs. Zions Bancorporation | ESSA Bancorp vs. Huntington Bancshares Incorporated | ESSA Bancorp vs. Comerica |
| Pacific Premier vs. Community West Bancshares | Pacific Premier vs. Heritage Financial | Pacific Premier vs. First Financial Northwest | Pacific Premier 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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