Correlation Between Bank of San Francisco and Heartland Banccorp

Can any of the company-specific risk be diversified away by investing in both Bank of San Francisco and Heartland Banccorp 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 Bank of San Francisco and Heartland Banccorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank of San and Heartland Banccorp, you can compare the effects of market volatilities on Bank of San Francisco and Heartland Banccorp 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 Bank of San Francisco with a short position of Heartland Banccorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of San Francisco and Heartland Banccorp.

Diversification Opportunities for Bank of San Francisco and Heartland Banccorp

0.09

Correlation Coefficient

Bank of San Francisco  Heartland Banccorp

Significant diversification

The 3 months correlation between Bank and Heartland is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bank of San and Heartland Banccorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Banccorp and Bank of San Francisco 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 Bank of San are associated (or correlated) with Heartland Banccorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Banccorp has no effect on the direction of Bank of San Francisco i.e., Bank of San Francisco and Heartland Banccorp go up and down completely randomly.

Pair Corralation between Bank of San Francisco and Heartland Banccorp

Given the investment horizon of 90 days Bank of San is expected to under-perform the Heartland Banccorp. But the otc stock apears to be less risky and, when comparing its historical volatility, Bank of San is 1.3 times less risky than Heartland Banccorp. The otc stock trades about -0.05 of its potential returns per unit of risk. The Heartland Banccorp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  15,327  in Heartland Banccorp on December 29, 2024 and sell it today you would earn a total of  673.00  from holding Heartland Banccorp or generate 4.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	39.34%
Values	Daily Returns

Bank of San  vs.  Heartland Banccorp

Bank of San Francisco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of San has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Bank of San Francisco is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Heartland Banccorp

Risk-Adjusted Performance

OK

Over the last 90 days Heartland Banccorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very fragile basic indicators, Heartland Banccorp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bank of San Francisco and Heartland Banccorp

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

The idea behind Bank of San and Heartland Banccorp 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.