Correlation Between 1st Source and Waterstone Financial
Can any of the company-specific risk be diversified away by investing in both 1st Source and Waterstone Financial 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 1st Source and Waterstone Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1st Source and Waterstone Financial, you can compare the effects of market volatilities on 1st Source and Waterstone Financial 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 1st Source with a short position of Waterstone Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st Source and Waterstone Financial.
Diversification Opportunities for 1st Source and Waterstone Financial
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 1st and Waterstone is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding 1st Source and Waterstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waterstone Financial and 1st Source 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 1st Source are associated (or correlated) with Waterstone Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waterstone Financial has no effect on the direction of 1st Source i.e., 1st Source and Waterstone Financial go up and down completely randomly.
Pair Corralation between 1st Source and Waterstone Financial
Given the investment horizon of 90 days 1st Source is expected to generate 0.89 times more return on investment than Waterstone Financial. However, 1st Source is 1.12 times less risky than Waterstone Financial. It trades about 0.07 of its potential returns per unit of risk. Waterstone Financial is currently generating about 0.03 per unit of risk. If you would invest 4,871 in 1st Source on November 9, 2024 and sell it today you would earn a total of 1,703 from holding 1st Source or generate 34.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
1st Source vs. Waterstone Financial
Performance |
| Timeline |
| 1st Source |
| Waterstone Financial |
1st Source and Waterstone Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1st Source and Waterstone Financial
The main advantage of trading using opposite 1st Source and Waterstone Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1st Source position performs unexpectedly, Waterstone Financial 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 Waterstone Financial will offset losses from the drop in Waterstone Financial's long position.| 1st Source vs. Penns Woods Bancorp | 1st Source vs. Great Southern Bancorp | 1st Source vs. Waterstone Financial | 1st Source vs. Chemung Financial Corp |
| Waterstone Financial vs. National Bank Holdings | Waterstone Financial vs. Community West Bancshares | Waterstone Financial vs. Financial Institutions | Waterstone Financial vs. Kearny Financial Corp |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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