Correlation Between Luther Burbank and Peoples Bancorp

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Can any of the company-specific risk be diversified away by investing in both Luther Burbank and Peoples Bancorp 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 Luther Burbank and Peoples Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luther Burbank and Peoples Bancorp, you can compare the effects of market volatilities on Luther Burbank and Peoples Bancorp 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 Luther Burbank with a short position of Peoples Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luther Burbank and Peoples Bancorp.

Diversification Opportunities for Luther Burbank and Peoples Bancorp

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Luther and Peoples is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Luther Burbank and Peoples Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Bancorp and Luther Burbank 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 Luther Burbank are associated (or correlated) with Peoples Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Bancorp has no effect on the direction of Luther Burbank i.e., Luther Burbank and Peoples Bancorp go up and down completely randomly.

Pair Corralation between Luther Burbank and Peoples Bancorp

If you would invest  3,114  in Peoples Bancorp on August 28, 2024 and sell it today you would earn a total of  488.00  from holding Peoples Bancorp or generate 15.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy4.76%
ValuesDaily Returns

Luther Burbank  vs.  Peoples Bancorp

 Performance 
       Timeline  
Luther Burbank 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Luther Burbank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Luther Burbank is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.
Peoples Bancorp 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Peoples Bancorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Peoples Bancorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Luther Burbank and Peoples Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Luther Burbank and Peoples Bancorp

The main advantage of trading using opposite Luther Burbank and Peoples Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luther Burbank position performs unexpectedly, Peoples Bancorp 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 Peoples Bancorp will offset losses from the drop in Peoples Bancorp's long position.
The idea behind Luther Burbank and Peoples Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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