Correlation Between Waterstone Financial and Plumas Bancorp
Can any of the company-specific risk be diversified away by investing in both Waterstone Financial and Plumas Bancorp 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 Plumas Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waterstone Financial and Plumas Bancorp, you can compare the effects of market volatilities on Waterstone Financial and Plumas Bancorp 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 Plumas Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waterstone Financial and Plumas Bancorp.
Diversification Opportunities for Waterstone Financial and Plumas Bancorp
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Waterstone and Plumas is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Waterstone Financial and Plumas Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumas Bancorp 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 Plumas Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumas Bancorp has no effect on the direction of Waterstone Financial i.e., Waterstone Financial and Plumas Bancorp go up and down completely randomly.
Pair Corralation between Waterstone Financial and Plumas Bancorp
Given the investment horizon of 90 days Waterstone Financial is expected to generate 5.96 times less return on investment than Plumas Bancorp. In addition to that, Waterstone Financial is 1.4 times more volatile than Plumas Bancorp. It trades about 0.05 of its total potential returns per unit of risk. Plumas Bancorp is currently generating about 0.44 per unit of volatility. If you would invest 4,124 in Plumas Bancorp on September 1, 2024 and sell it today you would earn a total of 822.00 from holding Plumas Bancorp or generate 19.93% 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. Plumas Bancorp
Performance |
| Timeline |
| Waterstone Financial |
| Plumas Bancorp |
Waterstone Financial and Plumas Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waterstone Financial and Plumas Bancorp
The main advantage of trading using opposite Waterstone Financial and Plumas Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waterstone Financial position performs unexpectedly, Plumas Bancorp 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 Plumas Bancorp will offset losses from the drop in Plumas Bancorp'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 |
| Plumas Bancorp vs. Home Federal Bancorp | Plumas Bancorp vs. First Northwest Bancorp | Plumas Bancorp vs. Lake Shore Bancorp | Plumas Bancorp vs. Community West 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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