Correlation Between ST Bancorp and LINKBANCORP
Can any of the company-specific risk be diversified away by investing in both ST Bancorp and LINKBANCORP 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 ST Bancorp and LINKBANCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ST Bancorp and LINKBANCORP, you can compare the effects of market volatilities on ST Bancorp and LINKBANCORP 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 ST Bancorp with a short position of LINKBANCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ST Bancorp and LINKBANCORP.
Diversification Opportunities for ST Bancorp and LINKBANCORP
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between STBA and LINKBANCORP is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding ST Bancorp and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP and ST Bancorp 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 ST Bancorp are associated (or correlated) with LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of ST Bancorp i.e., ST Bancorp and LINKBANCORP go up and down completely randomly.
Pair Corralation between ST Bancorp and LINKBANCORP
Given the investment horizon of 90 days ST Bancorp is expected to generate 1.26 times less return on investment than LINKBANCORP. In addition to that, ST Bancorp is 1.33 times more volatile than LINKBANCORP. It trades about 0.18 of its total potential returns per unit of risk. LINKBANCORP is currently generating about 0.3 per unit of volatility. If you would invest 640.00 in LINKBANCORP on August 25, 2024 and sell it today you would earn a total of 118.00 from holding LINKBANCORP or generate 18.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ST Bancorp vs. LINKBANCORP
Performance |
| Timeline |
| ST Bancorp |
| LINKBANCORP |
ST Bancorp and LINKBANCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ST Bancorp and LINKBANCORP
The main advantage of trading using opposite ST Bancorp and LINKBANCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ST Bancorp position performs unexpectedly, LINKBANCORP 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 LINKBANCORP will offset losses from the drop in LINKBANCORP's long position.| ST Bancorp vs. CrossFirst Bankshares | ST Bancorp vs. Enterprise Financial Services | ST Bancorp vs. The First Bancshares, | ST Bancorp vs. First Bancorp |
| LINKBANCORP vs. Home Federal Bancorp | LINKBANCORP vs. Lake Shore Bancorp | LINKBANCORP vs. Community West Bancshares | LINKBANCORP vs. Magyar 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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