Correlation Between Sound Financial and TrustCo Bank
Can any of the company-specific risk be diversified away by investing in both Sound Financial and TrustCo Bank 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 TrustCo Bank 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 TrustCo Bank Corp, you can compare the effects of market volatilities on Sound Financial and TrustCo Bank 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 TrustCo Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sound Financial and TrustCo Bank.
Diversification Opportunities for Sound Financial and TrustCo Bank
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sound and TrustCo is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sound Financial Bancorp and TrustCo Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrustCo Bank Corp 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 TrustCo Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrustCo Bank Corp has no effect on the direction of Sound Financial i.e., Sound Financial and TrustCo Bank go up and down completely randomly.
Pair Corralation between Sound Financial and TrustCo Bank
Given the investment horizon of 90 days Sound Financial is expected to generate 1.08 times less return on investment than TrustCo Bank. In addition to that, Sound Financial is 1.4 times more volatile than TrustCo Bank Corp. It trades about 0.0 of its total potential returns per unit of risk. TrustCo Bank Corp is currently generating about 0.0 per unit of volatility. If you would invest 3,652 in TrustCo Bank Corp on September 14, 2024 and sell it today you would lose (1.00) from holding TrustCo Bank Corp or give up 0.03% 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. TrustCo Bank Corp
Performance |
| Timeline |
| Sound Financial Bancorp |
| TrustCo Bank Corp |
Sound Financial and TrustCo Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sound Financial and TrustCo Bank
The main advantage of trading using opposite Sound Financial and TrustCo Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sound Financial position performs unexpectedly, TrustCo Bank 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 TrustCo Bank will offset losses from the drop in TrustCo Bank'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 |
| TrustCo Bank vs. Southern Missouri Bancorp | TrustCo Bank vs. IF Bancorp | TrustCo Bank vs. Colony Bankcorp | TrustCo Bank vs. Old Point Financial |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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