Correlation Between Prosperity Bancshares and Peapack Gladstone
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares and Peapack Gladstone 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 Prosperity Bancshares and Peapack Gladstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and Peapack Gladstone Financial, you can compare the effects of market volatilities on Prosperity Bancshares and Peapack Gladstone 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 Prosperity Bancshares with a short position of Peapack Gladstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and Peapack Gladstone.
Diversification Opportunities for Prosperity Bancshares and Peapack Gladstone
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Prosperity and Peapack is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and Peapack Gladstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peapack Gladstone and Prosperity Bancshares 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 Prosperity Bancshares are associated (or correlated) with Peapack Gladstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peapack Gladstone has no effect on the direction of Prosperity Bancshares i.e., Prosperity Bancshares and Peapack Gladstone go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and Peapack Gladstone
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 1.15 times less return on investment than Peapack Gladstone. But when comparing it to its historical volatility, Prosperity Bancshares is 1.66 times less risky than Peapack Gladstone. It trades about 0.09 of its potential returns per unit of risk. Peapack Gladstone Financial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,631 in Peapack Gladstone Financial on August 27, 2024 and sell it today you would earn a total of 1,006 from holding Peapack Gladstone Financial or generate 38.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosperity Bancshares vs. Peapack Gladstone Financial
Performance |
| Timeline |
| Prosperity Bancshares |
| Peapack Gladstone |
Prosperity Bancshares and Peapack Gladstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and Peapack Gladstone
The main advantage of trading using opposite Prosperity Bancshares and Peapack Gladstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares position performs unexpectedly, Peapack Gladstone 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 Peapack Gladstone will offset losses from the drop in Peapack Gladstone's long position.| Prosperity Bancshares vs. Fifth Third Bancorp | Prosperity Bancshares vs. Zions Bancorporation | Prosperity Bancshares vs. Huntington Bancshares Incorporated | Prosperity Bancshares vs. PNC Financial Services |
| Peapack Gladstone vs. Sound Financial Bancorp | Peapack Gladstone vs. Finward Bancorp | Peapack Gladstone vs. Franklin Financial Services | Peapack Gladstone vs. Community West Bancshares |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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