Correlation Between Lake Shore and Sterling Bancorp
Can any of the company-specific risk be diversified away by investing in both Lake Shore and Sterling 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 Lake Shore and Sterling Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lake Shore Bancorp and Sterling Bancorp, you can compare the effects of market volatilities on Lake Shore and Sterling 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 Lake Shore with a short position of Sterling Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Shore and Sterling Bancorp.
Diversification Opportunities for Lake Shore and Sterling Bancorp
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lake and Sterling is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lake Shore Bancorp and Sterling Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Bancorp and Lake Shore 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 Lake Shore Bancorp are associated (or correlated) with Sterling Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Bancorp has no effect on the direction of Lake Shore i.e., Lake Shore and Sterling Bancorp go up and down completely randomly.
Pair Corralation between Lake Shore and Sterling Bancorp
Given the investment horizon of 90 days Lake Shore Bancorp is expected to generate 4.35 times more return on investment than Sterling Bancorp. However, Lake Shore is 4.35 times more volatile than Sterling Bancorp. It trades about 0.2 of its potential returns per unit of risk. Sterling Bancorp is currently generating about 0.05 per unit of risk. If you would invest 1,341 in Lake Shore Bancorp on November 9, 2024 and sell it today you would earn a total of 219.00 from holding Lake Shore Bancorp or generate 16.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Lake Shore Bancorp vs. Sterling Bancorp
Performance |
| Timeline |
| Lake Shore Bancorp |
| Sterling Bancorp |
Lake Shore and Sterling Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Shore and Sterling Bancorp
The main advantage of trading using opposite Lake Shore and Sterling Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Shore position performs unexpectedly, Sterling 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 Sterling Bancorp will offset losses from the drop in Sterling Bancorp's long position.| Lake Shore vs. Home Federal Bancorp | Lake Shore vs. Magyar Bancorp | Lake Shore vs. Community West Bancshares |
| Sterling Bancorp vs. Home Federal Bancorp | Sterling Bancorp vs. Lake Shore Bancorp | Sterling Bancorp vs. Magyar Bancorp | Sterling Bancorp vs. Franklin Financial Services |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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