Correlation Between Harbor Bankshares and Century Next

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

By analyzing existing cross correlation between Harbor Bankshares and Century Next Financial, you can compare the effects of market volatilities on Harbor Bankshares and Century Next 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 Century Next. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor Bankshares and Century Next.

Diversification Opportunities for Harbor Bankshares and Century Next

0.43

Correlation Coefficient

Harbor Bankshares  Century Next

Very weak diversification

The 3 months correlation between Harbor and Century is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Bankshares and Century Next Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Next Financial 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 Century Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Next Financial has no effect on the direction of Harbor Bankshares i.e., Harbor Bankshares and Century Next go up and down completely randomly.

Pair Corralation between Harbor Bankshares and Century Next

Given the investment horizon of 90 days Harbor Bankshares is expected to generate 2.16 times more return on investment than Century Next. However, Harbor Bankshares is 2.16 times more volatile than Century Next Financial. It trades about 0.14 of its potential returns per unit of risk. Century Next Financial is currently generating about 0.07 per unit of risk. If you would invest  1,310  in Harbor Bankshares on December 29, 2024 and sell it today you would earn a total of  490.00  from holding Harbor Bankshares or generate 37.4% return on investment over 90 days.

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

Harbor Bankshares  vs.  Century Next Financial

Harbor Bankshares

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Bankshares are ranked lower than 11 (%) 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.

Century Next Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Century Next Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Century Next may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Harbor Bankshares and Century Next

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

The idea behind Harbor Bankshares and Century Next Financial 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..