Correlation Between Provident Financial and Sandy Spring
Can any of the company-specific risk be diversified away by investing in both Provident Financial 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 Provident Financial and Sandy Spring into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Provident Financial Services and Sandy Spring Bancorp, you can compare the effects of market volatilities on Provident Financial 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 Provident Financial with a short position of Sandy Spring. Check out your portfolio center. Please also check ongoing floating volatility patterns of Provident Financial and Sandy Spring.
Diversification Opportunities for Provident Financial and Sandy Spring
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Provident and Sandy is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Provident Financial Services 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 Provident Financial 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 Provident Financial Services 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 Provident Financial i.e., Provident Financial and Sandy Spring go up and down completely randomly.
Pair Corralation between Provident Financial and Sandy Spring
Considering the 90-day investment horizon Provident Financial is expected to generate 1.48 times less return on investment than Sandy Spring. But when comparing it to its historical volatility, Provident Financial Services is 1.06 times less risky than Sandy Spring. It trades about 0.04 of its potential returns per unit of risk. Sandy Spring Bancorp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,176 in Sandy Spring Bancorp on October 22, 2024 and sell it today you would earn a total of 211.00 from holding Sandy Spring Bancorp or generate 6.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Provident Financial Services vs. Sandy Spring Bancorp
Performance |
| Timeline |
| Provident Financial |
| Sandy Spring Bancorp |
Provident Financial and Sandy Spring Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Provident Financial and Sandy Spring
The main advantage of trading using opposite Provident Financial and Sandy Spring positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Provident Financial 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.| Provident Financial vs. First Mid Illinois | Provident Financial vs. ConnectOne Bancorp | Provident Financial vs. Finward Bancorp | Provident Financial vs. CrossFirst Bankshares |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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