Correlation Between Berkshire Hills and HarborOne Bancorp

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

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

Diversification Opportunities for Berkshire Hills and HarborOne Bancorp

0.84

Correlation Coefficient

Berkshire Hills  HarborOne Bancorp

Very poor diversification

The 3 months correlation between Berkshire and HarborOne is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hills Bancorp and HarborOne Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HarborOne Bancorp and Berkshire Hills 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 Berkshire Hills Bancorp are associated (or correlated) with HarborOne Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HarborOne Bancorp has no effect on the direction of Berkshire Hills i.e., Berkshire Hills and HarborOne Bancorp go up and down completely randomly.

Pair Corralation between Berkshire Hills and HarborOne Bancorp

Given the investment horizon of 90 days Berkshire Hills Bancorp is expected to generate 0.57 times more return on investment than HarborOne Bancorp. However, Berkshire Hills Bancorp is 1.75 times less risky than HarborOne Bancorp. It trades about -0.07 of its potential returns per unit of risk. HarborOne Bancorp is currently generating about -0.07 per unit of risk. If you would invest  2,806  in Berkshire Hills Bancorp on December 30, 2024 and sell it today you would lose (191.00) from holding Berkshire Hills Bancorp or give up 6.81% of portfolio value over 90 days.

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

Berkshire Hills Bancorp  vs.  HarborOne Bancorp

Berkshire Hills Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Berkshire Hills Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

HarborOne Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days HarborOne Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Berkshire Hills and HarborOne Bancorp

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

The idea behind Berkshire Hills Bancorp and HarborOne Bancorp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.