Correlation Between Harbor Bankshares and Savi Financial

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

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

Diversification Opportunities for Harbor Bankshares and Savi Financial

0.82

Correlation Coefficient

Harbor Bankshares  Savi Financial

Very poor diversification

The 3 months correlation between Harbor and Savi is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Bankshares and Savi Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Savi 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 Savi Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Savi Financial has no effect on the direction of Harbor Bankshares i.e., Harbor Bankshares and Savi Financial go up and down completely randomly.

Pair Corralation between Harbor Bankshares and Savi Financial

Given the investment horizon of 90 days Harbor Bankshares is expected to under-perform the Savi Financial. In addition to that, Harbor Bankshares is 9.27 times more volatile than Savi Financial. It trades about -0.03 of its total potential returns per unit of risk. Savi Financial is currently generating about 0.1 per unit of volatility. If you would invest  1,505  in Savi Financial on October 11, 2024 and sell it today you would earn a total of  5.00  from holding Savi Financial or generate 0.33% return on investment over 90 days.

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

Harbor Bankshares  vs.  Savi Financial

Harbor Bankshares

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Bankshares are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, Harbor Bankshares may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Savi Financial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Savi Financial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Savi Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Harbor Bankshares and Savi Financial

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

The idea behind Harbor Bankshares and Savi 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.