Correlation Between Northrim BanCorp and Sandy Spring
Can any of the company-specific risk be diversified away by investing in both Northrim BanCorp 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 Northrim BanCorp and Sandy Spring into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northrim BanCorp and Sandy Spring Bancorp, you can compare the effects of market volatilities on Northrim BanCorp 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 Northrim BanCorp with a short position of Sandy Spring. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northrim BanCorp and Sandy Spring.
Diversification Opportunities for Northrim BanCorp and Sandy Spring
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northrim and Sandy is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Northrim BanCorp 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 Northrim 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 Northrim BanCorp 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 Northrim BanCorp i.e., Northrim BanCorp and Sandy Spring go up and down completely randomly.
Pair Corralation between Northrim BanCorp and Sandy Spring
Given the investment horizon of 90 days Northrim BanCorp is expected to generate 1.15 times more return on investment than Sandy Spring. However, Northrim BanCorp is 1.15 times more volatile than Sandy Spring Bancorp. It trades about 0.34 of its potential returns per unit of risk. Sandy Spring Bancorp is currently generating about 0.21 per unit of risk. If you would invest 6,666 in Northrim BanCorp on August 28, 2024 and sell it today you would earn a total of 2,142 from holding Northrim BanCorp or generate 32.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northrim BanCorp vs. Sandy Spring Bancorp
Performance |
| Timeline |
| Northrim BanCorp |
| Sandy Spring Bancorp |
Northrim BanCorp and Sandy Spring Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northrim BanCorp and Sandy Spring
The main advantage of trading using opposite Northrim BanCorp and Sandy Spring positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northrim BanCorp 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.| Northrim BanCorp vs. Peoples Bancorp | Northrim BanCorp vs. Eagle Bancorp | Northrim BanCorp vs. United Bankshares | Northrim BanCorp vs. Pacific Premier 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |