Correlation Between Sound Financial and OptimumBank Holdings
Can any of the company-specific risk be diversified away by investing in both Sound Financial and OptimumBank Holdings 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 OptimumBank Holdings 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 OptimumBank Holdings, you can compare the effects of market volatilities on Sound Financial and OptimumBank Holdings 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 OptimumBank Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sound Financial and OptimumBank Holdings.
Diversification Opportunities for Sound Financial and OptimumBank Holdings
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sound and OptimumBank is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sound Financial Bancorp and OptimumBank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OptimumBank Holdings 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 OptimumBank Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OptimumBank Holdings has no effect on the direction of Sound Financial i.e., Sound Financial and OptimumBank Holdings go up and down completely randomly.
Pair Corralation between Sound Financial and OptimumBank Holdings
Given the investment horizon of 90 days Sound Financial Bancorp is expected to generate 0.77 times more return on investment than OptimumBank Holdings. However, Sound Financial Bancorp is 1.29 times less risky than OptimumBank Holdings. It trades about 0.0 of its potential returns per unit of risk. OptimumBank Holdings is currently generating about -0.07 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sound Financial Bancorp vs. OptimumBank Holdings
Performance |
| Timeline |
| Sound Financial Bancorp |
| OptimumBank Holdings |
Sound Financial and OptimumBank Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sound Financial and OptimumBank Holdings
The main advantage of trading using opposite Sound Financial and OptimumBank Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sound Financial position performs unexpectedly, OptimumBank Holdings 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 OptimumBank Holdings will offset losses from the drop in OptimumBank Holdings' 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 |
| OptimumBank Holdings vs. First National Bank | OptimumBank Holdings vs. TrustCo Bank Corp | OptimumBank Holdings vs. Inter Co Class | OptimumBank Holdings vs. Rhinebeck Bancorp |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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