Correlation Between ESSA Bancorp and Simmons First
Can any of the company-specific risk be diversified away by investing in both ESSA Bancorp and Simmons First 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 ESSA Bancorp and Simmons First into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSA Bancorp and Simmons First National, you can compare the effects of market volatilities on ESSA Bancorp and Simmons First 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 ESSA Bancorp with a short position of Simmons First. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSA Bancorp and Simmons First.
Diversification Opportunities for ESSA Bancorp and Simmons First
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between ESSA and Simmons is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding ESSA Bancorp and Simmons First National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simmons First National and ESSA Bancorp 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 ESSA Bancorp are associated (or correlated) with Simmons First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simmons First National has no effect on the direction of ESSA Bancorp i.e., ESSA Bancorp and Simmons First go up and down completely randomly.
Pair Corralation between ESSA Bancorp and Simmons First
Given the investment horizon of 90 days ESSA Bancorp is expected to generate 0.85 times more return on investment than Simmons First. However, ESSA Bancorp is 1.18 times less risky than Simmons First. It trades about 0.02 of its potential returns per unit of risk. Simmons First National is currently generating about -0.11 per unit of risk. If you would invest 2,091 in ESSA Bancorp on December 2, 2024 and sell it today you would earn a total of 9.00 from holding ESSA Bancorp or generate 0.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
ESSA Bancorp vs. Simmons First National
Performance |
Timeline |
ESSA Bancorp |
Simmons First National |
ESSA Bancorp and Simmons First Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ESSA Bancorp and Simmons First
The main advantage of trading using opposite ESSA Bancorp and Simmons First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSA Bancorp position performs unexpectedly, Simmons First 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 Simmons First will offset losses from the drop in Simmons First's long position.ESSA Bancorp vs. Community West Bancshares | ESSA Bancorp vs. First Northwest Bancorp | ESSA Bancorp vs. First Community | ESSA Bancorp vs. Oak Valley Bancorp |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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