Correlation Between OptimumBank Holdings and Sound Financial
Can any of the company-specific risk be diversified away by investing in both OptimumBank Holdings and Sound Financial 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 OptimumBank Holdings and Sound Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OptimumBank Holdings and Sound Financial Bancorp, you can compare the effects of market volatilities on OptimumBank Holdings and Sound Financial 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 OptimumBank Holdings with a short position of Sound Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of OptimumBank Holdings and Sound Financial.
Diversification Opportunities for OptimumBank Holdings and Sound Financial
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between OptimumBank and Sound is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding OptimumBank Holdings and Sound Financial Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Financial Bancorp and OptimumBank Holdings 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 OptimumBank Holdings are associated (or correlated) with Sound Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Financial Bancorp has no effect on the direction of OptimumBank Holdings i.e., OptimumBank Holdings and Sound Financial go up and down completely randomly.
Pair Corralation between OptimumBank Holdings and Sound Financial
Given the investment horizon of 90 days OptimumBank Holdings is expected to generate 23.62 times less return on investment than Sound Financial. But when comparing it to its historical volatility, OptimumBank Holdings is 31.82 times less risky than Sound Financial. It trades about 0.08 of its potential returns per unit of risk. Sound Financial Bancorp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,575 in Sound Financial Bancorp on September 14, 2024 and sell it today you would earn a total of 1,864 from holding Sound Financial Bancorp or generate 52.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 88.1% |
| Values | Daily Returns |
OptimumBank Holdings vs. Sound Financial Bancorp
Performance |
| Timeline |
| OptimumBank Holdings |
| Sound Financial Bancorp |
OptimumBank Holdings and Sound Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OptimumBank Holdings and Sound Financial
The main advantage of trading using opposite OptimumBank Holdings and Sound Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OptimumBank Holdings position performs unexpectedly, Sound Financial 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 Sound Financial will offset losses from the drop in Sound Financial's long position.| OptimumBank Holdings vs. First National Bank | OptimumBank Holdings vs. TrustCo Bank Corp | OptimumBank Holdings vs. Inter Co Class | OptimumBank Holdings vs. Rhinebeck Bancorp |
| Sound Financial vs. Finward Bancorp | Sound Financial vs. Franklin Financial Services | Sound Financial vs. Community West Bancshares | Sound Financial vs. Home Federal Bancorp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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