Correlation Between Northfield Bancorp and Sierra Bancorp
Can any of the company-specific risk be diversified away by investing in both Northfield Bancorp and Sierra 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 Northfield Bancorp and Sierra Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northfield Bancorp and Sierra Bancorp, you can compare the effects of market volatilities on Northfield Bancorp and Sierra 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 Northfield Bancorp with a short position of Sierra Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northfield Bancorp and Sierra Bancorp.
Diversification Opportunities for Northfield Bancorp and Sierra Bancorp
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northfield and Sierra is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Northfield Bancorp and Sierra Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Bancorp and Northfield 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 Northfield Bancorp are associated (or correlated) with Sierra Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Bancorp has no effect on the direction of Northfield Bancorp i.e., Northfield Bancorp and Sierra Bancorp go up and down completely randomly.
Pair Corralation between Northfield Bancorp and Sierra Bancorp
Given the investment horizon of 90 days Northfield Bancorp is expected to generate 6.14 times less return on investment than Sierra Bancorp. In addition to that, Northfield Bancorp is 1.03 times more volatile than Sierra Bancorp. It trades about 0.01 of its total potential returns per unit of risk. Sierra Bancorp is currently generating about 0.06 per unit of volatility. If you would invest 1,955 in Sierra Bancorp on August 28, 2024 and sell it today you would earn a total of 1,283 from holding Sierra Bancorp or generate 65.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northfield Bancorp vs. Sierra Bancorp
Performance |
| Timeline |
| Northfield Bancorp |
| Sierra Bancorp |
Northfield Bancorp and Sierra Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northfield Bancorp and Sierra Bancorp
The main advantage of trading using opposite Northfield Bancorp and Sierra Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northfield Bancorp position performs unexpectedly, Sierra 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 Sierra Bancorp will offset losses from the drop in Sierra Bancorp's long position.| Northfield Bancorp vs. Finward Bancorp | Northfield Bancorp vs. Community West Bancshares | Northfield Bancorp vs. First Financial Northwest | Northfield Bancorp vs. Home Bancorp |
| Sierra Bancorp vs. Fifth Third Bancorp | Sierra Bancorp vs. Huntington Bancshares Incorporated | Sierra Bancorp vs. MT Bank |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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