Correlation Between Sandy Spring and Home Bancorp
Can any of the company-specific risk be diversified away by investing in both Sandy Spring and Home Bancorp 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 Home Bancorp 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 Home Bancorp, you can compare the effects of market volatilities on Sandy Spring and Home Bancorp 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 Home Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandy Spring and Home Bancorp.
Diversification Opportunities for Sandy Spring and Home Bancorp
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sandy and Home is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Sandy Spring Bancorp and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Bancorp 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 Home Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Bancorp has no effect on the direction of Sandy Spring i.e., Sandy Spring and Home Bancorp go up and down completely randomly.
Pair Corralation between Sandy Spring and Home Bancorp
Given the investment horizon of 90 days Sandy Spring Bancorp is expected to generate 1.54 times more return on investment than Home Bancorp. However, Sandy Spring is 1.54 times more volatile than Home Bancorp. It trades about 0.15 of its potential returns per unit of risk. Home Bancorp is currently generating about 0.09 per unit of risk. If you would invest 3,380 in Sandy Spring Bancorp on August 31, 2024 and sell it today you would earn a total of 371.00 from holding Sandy Spring Bancorp or generate 10.98% 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. Home Bancorp
Performance |
| Timeline |
| Sandy Spring Bancorp |
| Home Bancorp |
Sandy Spring and Home Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandy Spring and Home Bancorp
The main advantage of trading using opposite Sandy Spring and Home Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandy Spring position performs unexpectedly, Home Bancorp 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 Home Bancorp will offset losses from the drop in Home Bancorp'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 |
| Home Bancorp vs. Home Federal Bancorp | Home Bancorp vs. Community West Bancshares | Home Bancorp vs. First Financial Northwest | Home Bancorp vs. First Capital |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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