Correlation Between ESSA Bancorp and Trustmark
Can any of the company-specific risk be diversified away by investing in both ESSA Bancorp and Trustmark 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 Trustmark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSA Bancorp and Trustmark, you can compare the effects of market volatilities on ESSA Bancorp and Trustmark 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 Trustmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSA Bancorp and Trustmark.
Diversification Opportunities for ESSA Bancorp and Trustmark
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ESSA and Trustmark is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ESSA Bancorp and Trustmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trustmark 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 Trustmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trustmark has no effect on the direction of ESSA Bancorp i.e., ESSA Bancorp and Trustmark go up and down completely randomly.
Pair Corralation between ESSA Bancorp and Trustmark
Given the investment horizon of 90 days ESSA Bancorp is expected to generate 1.88 times less return on investment than Trustmark. But when comparing it to its historical volatility, ESSA Bancorp is 1.37 times less risky than Trustmark. It trades about 0.13 of its potential returns per unit of risk. Trustmark is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3,537 in Trustmark on August 31, 2024 and sell it today you would earn a total of 431.00 from holding Trustmark or generate 12.19% 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. Trustmark
Performance |
| Timeline |
| ESSA Bancorp |
| Trustmark |
ESSA Bancorp and Trustmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESSA Bancorp and Trustmark
The main advantage of trading using opposite ESSA Bancorp and Trustmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSA Bancorp position performs unexpectedly, Trustmark 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 Trustmark will offset losses from the drop in Trustmark'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 |
| Trustmark vs. Home Bancorp | Trustmark vs. First Business Financial | Trustmark vs. LINKBANCORP | Trustmark vs. Great Southern 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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