Correlation Between TC Bancshares and Sound Financial
Can any of the company-specific risk be diversified away by investing in both TC Bancshares and Sound 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 TC Bancshares and Sound Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TC Bancshares and Sound Financial Bancorp, you can compare the effects of market volatilities on TC Bancshares and Sound 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 TC Bancshares with a short position of Sound Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of TC Bancshares and Sound Financial.
Diversification Opportunities for TC Bancshares and Sound Financial
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between TCBC and Sound is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding TC Bancshares and Sound Financial Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Financial Bancorp and TC 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 TC Bancshares are associated (or correlated) with Sound Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Financial Bancorp has no effect on the direction of TC Bancshares i.e., TC Bancshares and Sound Financial go up and down completely randomly.
Pair Corralation between TC Bancshares and Sound Financial
Given the investment horizon of 90 days TC Bancshares is expected to under-perform the Sound Financial. But the stock apears to be less risky and, when comparing its historical volatility, TC Bancshares is 28.5 times less risky than Sound Financial. The stock trades about 0.0 of its potential returns per unit of risk. The Sound Financial Bancorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,852 in Sound Financial Bancorp on August 28, 2024 and sell it today you would earn a total of 1,505 from holding Sound Financial Bancorp or generate 39.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.02% |
| Values | Daily Returns |
TC Bancshares vs. Sound Financial Bancorp
Performance |
| Timeline |
| TC Bancshares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sound Financial Bancorp |
TC Bancshares and Sound Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TC Bancshares and Sound Financial
The main advantage of trading using opposite TC Bancshares and Sound Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TC Bancshares position performs unexpectedly, Sound 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 Sound Financial will offset losses from the drop in Sound Financial's long position.| TC Bancshares vs. Home Federal Bancorp | TC Bancshares vs. Lake Shore Bancorp | TC Bancshares vs. Community West Bancshares | TC Bancshares vs. First Financial Northwest |
| Sound Financial vs. Finward Bancorp | Sound Financial vs. Franklin Financial Services | Sound Financial vs. Community West Bancshares | Sound Financial vs. Home Federal 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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