Correlation Between Peak Bancorp and First Sound

Can any of the company-specific risk be diversified away by investing in both Peak Bancorp and First Sound 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 Peak Bancorp and First Sound into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Peak Bancorp and First Sound

-0.81

Correlation Coefficient

Peak Bancorp  First Sound

Pay attention - limited upside

The 3 months correlation between Peak and First is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Peak Bancorp and First Sound Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Sound Bank and Peak 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 Peak Bancorp are associated (or correlated) with First Sound. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Sound Bank has no effect on the direction of Peak Bancorp i.e., Peak Bancorp and First Sound go up and down completely randomly.

Pair Corralation between Peak Bancorp and First Sound

If you would invest  670.00  in First Sound Bank on September 4, 2024 and sell it today you would earn a total of  0.00  from holding First Sound Bank or generate 0.0% return on investment over 90 days.

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

Peak Bancorp  vs.  First Sound Bank

Peak Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

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

First Sound Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Peak Bancorp and First Sound

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

The idea behind Peak Bancorp and First Sound 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..