Correlation Between Summit Bancshares and Santa Cruz
Can any of the company-specific risk be diversified away by investing in both Summit Bancshares and Santa Cruz 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 Summit Bancshares and Santa Cruz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Bancshares and Santa Cruz County, you can compare the effects of market volatilities on Summit Bancshares and Santa Cruz 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 Summit Bancshares with a short position of Santa Cruz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Bancshares and Santa Cruz.
Diversification Opportunities for Summit Bancshares and Santa Cruz
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and Santa is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Summit Bancshares and Santa Cruz County in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santa Cruz County and Summit Bancshares 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 Summit Bancshares are associated (or correlated) with Santa Cruz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santa Cruz County has no effect on the direction of Summit Bancshares i.e., Summit Bancshares and Santa Cruz go up and down completely randomly.
Pair Corralation between Summit Bancshares and Santa Cruz
Given the investment horizon of 90 days Summit Bancshares is expected to generate 5.42 times less return on investment than Santa Cruz. In addition to that, Summit Bancshares is 1.44 times more volatile than Santa Cruz County. It trades about 0.03 of its total potential returns per unit of risk. Santa Cruz County is currently generating about 0.21 per unit of volatility. If you would invest 3,319 in Santa Cruz County on September 3, 2024 and sell it today you would earn a total of 831.00 from holding Santa Cruz County or generate 25.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Summit Bancshares vs. Santa Cruz County
Performance |
| Timeline |
| Summit Bancshares |
| Santa Cruz County |
Summit Bancshares and Santa Cruz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Bancshares and Santa Cruz
The main advantage of trading using opposite Summit Bancshares and Santa Cruz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Bancshares position performs unexpectedly, Santa Cruz 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 Santa Cruz will offset losses from the drop in Santa Cruz's long position.| Summit Bancshares vs. First Hawaiian | Summit Bancshares vs. Central Pacific Financial | Summit Bancshares vs. Territorial Bancorp | Summit Bancshares vs. Comerica |
| Santa Cruz vs. Harbor Bankshares | Santa Cruz vs. Liberty Northwest Bancorp | Santa Cruz vs. Pioneer Bankcorp | Santa Cruz vs. Summit Bancshares |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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