Correlation Between Harbor Bankshares and Santa Cruz

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

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

Diversification Opportunities for Harbor Bankshares and Santa Cruz

0.7

Correlation Coefficient

Harbor Bankshares  Santa Cruz

Poor diversification

The 3 months correlation between Harbor and Santa is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Bankshares and Santa Cruz County in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santa Cruz County 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 Santa Cruz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santa Cruz County has no effect on the direction of Harbor Bankshares i.e., Harbor Bankshares and Santa Cruz go up and down completely randomly.

Pair Corralation between Harbor Bankshares and Santa Cruz

Given the investment horizon of 90 days Harbor Bankshares is expected to generate 1.57 times less return on investment than Santa Cruz. In addition to that, Harbor Bankshares is 3.14 times more volatile than Santa Cruz County. It trades about 0.03 of its total potential returns per unit of risk. Santa Cruz County is currently generating about 0.14 per unit of volatility. If you would invest  3,909  in Santa Cruz County on September 4, 2024 and sell it today you would earn a total of  246.00  from holding Santa Cruz County or generate 6.29% return on investment over 90 days.

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

Harbor Bankshares  vs.  Santa Cruz County

Harbor Bankshares

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Bankshares are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Harbor Bankshares is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Santa Cruz County

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Santa Cruz County are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Santa Cruz is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Harbor Bankshares and Santa Cruz

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

The idea behind Harbor Bankshares and Santa Cruz County 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.