Correlation Between Banc Of and Peoples Bancorp

Can any of the company-specific risk be diversified away by investing in both Banc Of and Peoples 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 Banc Of and Peoples Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banc of California and Peoples Bancorp of, you can compare the effects of market volatilities on Banc Of and Peoples 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 Banc Of with a short position of Peoples Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banc Of and Peoples Bancorp.

Diversification Opportunities for Banc Of and Peoples Bancorp

-0.72

Correlation Coefficient

Banc Of  Peoples Bancorp

Pay attention - limited upside

The 3 months correlation between Banc and Peoples is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Banc of California and Peoples Bancorp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Bancorp and Banc Of 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 Banc of California are associated (or correlated) with Peoples Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Bancorp has no effect on the direction of Banc Of i.e., Banc Of and Peoples Bancorp go up and down completely randomly.

Pair Corralation between Banc Of and Peoples Bancorp

Assuming the 90 days trading horizon Banc of California is expected to generate 0.24 times more return on investment than Peoples Bancorp. However, Banc of California is 4.09 times less risky than Peoples Bancorp. It trades about 0.13 of its potential returns per unit of risk. Peoples Bancorp of is currently generating about -0.12 per unit of risk. If you would invest  2,411  in Banc of California on December 26, 2024 and sell it today you would earn a total of  89.00  from holding Banc of California or generate 3.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Banc of California  vs.  Peoples Bancorp of

Banc of California

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Banc of California are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Banc Of is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Peoples Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peoples Bancorp of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Banc Of and Peoples Bancorp

The main advantage of trading using opposite Banc Of and Peoples Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banc Of position performs unexpectedly, Peoples 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 Peoples Bancorp will offset losses from the drop in Peoples Bancorp's long position.

The idea behind Banc of California and Peoples Bancorp of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.