Correlation Between Sandy Spring and First Interstate
Can any of the company-specific risk be diversified away by investing in both Sandy Spring and First Interstate 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 Sandy Spring and First Interstate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandy Spring Bancorp and First Interstate BancSystem, you can compare the effects of market volatilities on Sandy Spring and First Interstate 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 Sandy Spring with a short position of First Interstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandy Spring and First Interstate.
Diversification Opportunities for Sandy Spring and First Interstate
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sandy and First is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Sandy Spring Bancorp and First Interstate BancSystem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Interstate Ban and Sandy Spring 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 Sandy Spring Bancorp are associated (or correlated) with First Interstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Interstate Ban has no effect on the direction of Sandy Spring i.e., Sandy Spring and First Interstate go up and down completely randomly.
Pair Corralation between Sandy Spring and First Interstate
Given the investment horizon of 90 days Sandy Spring Bancorp is expected to generate 1.04 times more return on investment than First Interstate. However, Sandy Spring is 1.04 times more volatile than First Interstate BancSystem. It trades about 0.21 of its potential returns per unit of risk. First Interstate BancSystem is currently generating about 0.19 per unit of risk. If you would invest 3,339 in Sandy Spring Bancorp on August 27, 2024 and sell it today you would earn a total of 532.00 from holding Sandy Spring Bancorp or generate 15.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandy Spring Bancorp vs. First Interstate BancSystem
Performance |
| Timeline |
| Sandy Spring Bancorp |
| First Interstate Ban |
Sandy Spring and First Interstate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandy Spring and First Interstate
The main advantage of trading using opposite Sandy Spring and First Interstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandy Spring position performs unexpectedly, First Interstate 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 First Interstate will offset losses from the drop in First Interstate's long position.| Sandy Spring vs. Northrim BanCorp | Sandy Spring vs. Provident Financial Services | Sandy Spring vs. Community Trust Bancorp | Sandy Spring vs. First Interstate BancSystem |
| First Interstate vs. First Financial Bankshares | First Interstate vs. Independent Bank Group | First Interstate vs. CVB Financial | First Interstate vs. Eagle Bancorp Montana |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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