Correlation Between Harbor Bankshares and Community Bank

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

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

Diversification Opportunities for Harbor Bankshares and Community Bank

0.0

Correlation Coefficient

Harbor Bankshares  Community Bank

Pay attention - limited upside

The 3 months correlation between Harbor and Community is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Bankshares and Community Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Bank and Harbor Bankshares 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 Harbor Bankshares are associated (or correlated) with Community Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Bank has no effect on the direction of Harbor Bankshares i.e., Harbor Bankshares and Community Bank go up and down completely randomly.

Pair Corralation between Harbor Bankshares and Community Bank

If you would invest  1,328  in Harbor Bankshares on December 21, 2024 and sell it today you would earn a total of  436.00  from holding Harbor Bankshares or generate 32.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Harbor Bankshares  vs.  Community Bank

Harbor Bankshares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Bankshares are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, Harbor Bankshares disclosed solid returns over the last few months and may actually be approaching a breakup point.

Community Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Community Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Community Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Harbor Bankshares and Community Bank

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

The idea behind Harbor Bankshares and Community Bank 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.