Correlation Between Lakeland Financial and Heritage Commerce
Can any of the company-specific risk be diversified away by investing in both Lakeland Financial and Heritage Commerce 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 Lakeland Financial and Heritage Commerce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lakeland Financial and Heritage Commerce Corp, you can compare the effects of market volatilities on Lakeland Financial and Heritage Commerce 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 Lakeland Financial with a short position of Heritage Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lakeland Financial and Heritage Commerce.
Diversification Opportunities for Lakeland Financial and Heritage Commerce
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lakeland and Heritage is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Lakeland Financial and Heritage Commerce Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Commerce Corp and Lakeland Financial 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 Lakeland Financial are associated (or correlated) with Heritage Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Commerce Corp has no effect on the direction of Lakeland Financial i.e., Lakeland Financial and Heritage Commerce go up and down completely randomly.
Pair Corralation between Lakeland Financial and Heritage Commerce
Given the investment horizon of 90 days Lakeland Financial is expected to generate 1.1 times more return on investment than Heritage Commerce. However, Lakeland Financial is 1.1 times more volatile than Heritage Commerce Corp. It trades about 0.05 of its potential returns per unit of risk. Heritage Commerce Corp is currently generating about 0.05 per unit of risk. If you would invest 5,186 in Lakeland Financial on September 2, 2024 and sell it today you would earn a total of 2,160 from holding Lakeland Financial or generate 41.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lakeland Financial vs. Heritage Commerce Corp
Performance |
| Timeline |
| Lakeland Financial |
| Heritage Commerce Corp |
Lakeland Financial and Heritage Commerce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lakeland Financial and Heritage Commerce
The main advantage of trading using opposite Lakeland Financial and Heritage Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lakeland Financial position performs unexpectedly, Heritage Commerce 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 Heritage Commerce will offset losses from the drop in Heritage Commerce's long position.| Lakeland Financial vs. Home Bancorp | Lakeland Financial vs. Heritage Financial | Lakeland Financial vs. First Northwest Bancorp | Lakeland Financial vs. HomeTrust Bancshares |
| Heritage Commerce vs. Home Federal Bancorp | Heritage Commerce vs. First Financial Northwest | Heritage Commerce vs. First Northwest Bancorp | Heritage Commerce vs. First Capital |
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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