Correlation Between Inter Co and Sound Financial
Can any of the company-specific risk be diversified away by investing in both Inter Co and Sound 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 Inter Co and Sound Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inter Co Class and Sound Financial Bancorp, you can compare the effects of market volatilities on Inter Co and Sound 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 Inter Co with a short position of Sound Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inter Co and Sound Financial.
Diversification Opportunities for Inter Co and Sound Financial
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Inter and Sound is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Inter Co Class and Sound Financial Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Financial Bancorp and Inter Co 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 Inter Co Class are associated (or correlated) with Sound Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Financial Bancorp has no effect on the direction of Inter Co i.e., Inter Co and Sound Financial go up and down completely randomly.
Pair Corralation between Inter Co and Sound Financial
Given the investment horizon of 90 days Inter Co Class is expected to under-perform the Sound Financial. In addition to that, Inter Co is 3.35 times more volatile than Sound Financial Bancorp. It trades about -0.28 of its total potential returns per unit of risk. Sound Financial Bancorp is currently generating about 0.0 per unit of volatility. If you would invest 5,449 in Sound Financial Bancorp on September 14, 2024 and sell it today you would lose (6.00) from holding Sound Financial Bancorp or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inter Co Class vs. Sound Financial Bancorp
Performance |
| Timeline |
| Inter Co Class |
| Sound Financial Bancorp |
Inter Co and Sound Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inter Co and Sound Financial
The main advantage of trading using opposite Inter Co and Sound Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Co position performs unexpectedly, Sound 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 Sound Financial will offset losses from the drop in Sound Financial's long position.| Inter Co vs. Community West Bancshares | Inter Co vs. First Financial Northwest | Inter Co vs. First Northwest Bancorp | Inter Co vs. First Capital |
| Sound Financial vs. Finward Bancorp | Sound Financial vs. Franklin Financial Services | Sound Financial vs. Community West Bancshares | Sound Financial vs. Home Federal 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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