Correlation Between National Bankshares and Sandy Spring
Can any of the company-specific risk be diversified away by investing in both National Bankshares and Sandy Spring 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 National Bankshares and Sandy Spring into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bankshares and Sandy Spring Bancorp, you can compare the effects of market volatilities on National Bankshares and Sandy Spring 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 National Bankshares with a short position of Sandy Spring. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bankshares and Sandy Spring.
Diversification Opportunities for National Bankshares and Sandy Spring
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Sandy is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding National Bankshares and Sandy Spring Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandy Spring Bancorp and National Bankshares 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 National Bankshares are associated (or correlated) with Sandy Spring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandy Spring Bancorp has no effect on the direction of National Bankshares i.e., National Bankshares and Sandy Spring go up and down completely randomly.
Pair Corralation between National Bankshares and Sandy Spring
Given the investment horizon of 90 days National Bankshares is expected to generate 2.25 times less return on investment than Sandy Spring. In addition to that, National Bankshares is 1.19 times more volatile than Sandy Spring Bancorp. It trades about 0.04 of its total potential returns per unit of risk. Sandy Spring Bancorp is currently generating about 0.11 per unit of volatility. If you would invest 2,065 in Sandy Spring Bancorp on August 24, 2024 and sell it today you would earn a total of 1,652 from holding Sandy Spring Bancorp or generate 80.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bankshares vs. Sandy Spring Bancorp
Performance |
| Timeline |
| National Bankshares |
| Sandy Spring Bancorp |
National Bankshares and Sandy Spring Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bankshares and Sandy Spring
The main advantage of trading using opposite National Bankshares and Sandy Spring positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bankshares position performs unexpectedly, Sandy Spring 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 Sandy Spring will offset losses from the drop in Sandy Spring's long position.| National Bankshares vs. Finward Bancorp | National Bankshares vs. Community West Bancshares | National Bankshares vs. First Financial Northwest | National Bankshares vs. Oak Valley Bancorp |
| Sandy Spring vs. Northrim BanCorp | Sandy Spring vs. Provident Financial Services | Sandy Spring vs. Community Trust Bancorp | Sandy Spring vs. First Interstate BancSystem |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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