Correlation Between Waterstone Financial and Heritage Financial
Can any of the company-specific risk be diversified away by investing in both Waterstone Financial and Heritage 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 Waterstone Financial and Heritage Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waterstone Financial and Heritage Financial, you can compare the effects of market volatilities on Waterstone Financial and Heritage 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 Waterstone Financial with a short position of Heritage Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waterstone Financial and Heritage Financial.
Diversification Opportunities for Waterstone Financial and Heritage Financial
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Waterstone and Heritage is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Waterstone Financial and Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Financial and Waterstone 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 Waterstone Financial are associated (or correlated) with Heritage Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Financial has no effect on the direction of Waterstone Financial i.e., Waterstone Financial and Heritage Financial go up and down completely randomly.
Pair Corralation between Waterstone Financial and Heritage Financial
Given the investment horizon of 90 days Waterstone Financial is expected to generate 1.55 times less return on investment than Heritage Financial. But when comparing it to its historical volatility, Waterstone Financial is 1.01 times less risky than Heritage Financial. It trades about 0.06 of its potential returns per unit of risk. Heritage Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,703 in Heritage Financial on August 26, 2024 and sell it today you would earn a total of 947.00 from holding Heritage Financial or generate 55.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waterstone Financial vs. Heritage Financial
Performance |
| Timeline |
| Waterstone Financial |
| Heritage Financial |
Waterstone Financial and Heritage Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waterstone Financial and Heritage Financial
The main advantage of trading using opposite Waterstone Financial and Heritage Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waterstone Financial position performs unexpectedly, Heritage 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 Heritage Financial will offset losses from the drop in Heritage Financial's long position.| Waterstone Financial vs. National Bank Holdings | Waterstone Financial vs. Community West Bancshares | Waterstone Financial vs. Financial Institutions | Waterstone Financial vs. Kearny Financial Corp |
| Heritage Financial vs. Heritage Commerce Corp | Heritage Financial vs. Horizon Bancorp | Heritage Financial vs. Heartland Financial USA | Heritage Financial vs. Independent Bank |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |