Correlation Between Sound Financial and Inter Co
Can any of the company-specific risk be diversified away by investing in both Sound Financial and Inter Co 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 Sound Financial and Inter Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sound Financial Bancorp and Inter Co Class, you can compare the effects of market volatilities on Sound Financial and Inter Co 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 Sound Financial with a short position of Inter Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sound Financial and Inter Co.
Diversification Opportunities for Sound Financial and Inter Co
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sound and Inter is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sound Financial Bancorp and Inter Co Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Co Class and Sound 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 Sound Financial Bancorp are associated (or correlated) with Inter Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Co Class has no effect on the direction of Sound Financial i.e., Sound Financial and Inter Co go up and down completely randomly.
Pair Corralation between Sound Financial and Inter Co
Given the investment horizon of 90 days Sound Financial Bancorp is expected to generate 0.3 times more return on investment than Inter Co. However, Sound Financial Bancorp is 3.28 times less risky than Inter Co. It trades about 0.0 of its potential returns per unit of risk. Inter Co Class is currently generating about -0.32 per unit of risk. If you would invest 5,449 in Sound Financial Bancorp on September 14, 2024 and sell it today you would lose (6.00) from holding Sound Financial Bancorp or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sound Financial Bancorp vs. Inter Co Class
Performance |
| Timeline |
| Sound Financial Bancorp |
| Inter Co Class |
Sound Financial and Inter Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sound Financial and Inter Co
The main advantage of trading using opposite Sound Financial and Inter Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sound Financial position performs unexpectedly, Inter Co 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 Inter Co will offset losses from the drop in Inter Co's long position.| Sound Financial vs. Finward Bancorp | Sound Financial vs. Franklin Financial Services | Sound Financial vs. Community West Bancshares | Sound Financial vs. Home Federal Bancorp |
| Inter Co vs. Community West Bancshares | Inter Co vs. First Financial Northwest | Inter Co vs. First Northwest Bancorp | Inter Co 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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