Correlation Between Pacific Premier and Capitol Federal

Can any of the company-specific risk be diversified away by investing in both Pacific Premier and Capitol Federal 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 Pacific Premier and Capitol Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pacific Premier Bancorp and Capitol Federal Financial, you can compare the effects of market volatilities on Pacific Premier and Capitol Federal 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 Pacific Premier with a short position of Capitol Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Premier and Capitol Federal.

Diversification Opportunities for Pacific Premier and Capitol Federal

0.87

Correlation Coefficient

Pacific Premier  Capitol Federal

Very poor diversification

The 3 months correlation between Pacific and Capitol is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Premier Bancorp and Capitol Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Federal Financial and Pacific Premier 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 Pacific Premier Bancorp are associated (or correlated) with Capitol Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Federal Financial has no effect on the direction of Pacific Premier i.e., Pacific Premier and Capitol Federal go up and down completely randomly.

Pair Corralation between Pacific Premier and Capitol Federal

Given the investment horizon of 90 days Pacific Premier Bancorp is expected to under-perform the Capitol Federal. In addition to that, Pacific Premier is 1.1 times more volatile than Capitol Federal Financial. It trades about 0.0 of its total potential returns per unit of risk. Capitol Federal Financial is currently generating about 0.02 per unit of volatility. If you would invest  566.00  in Capitol Federal Financial on October 5, 2024 and sell it today you would earn a total of  16.00  from holding Capitol Federal Financial or generate 2.83% return on investment over 90 days.

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

Pacific Premier Bancorp  vs.  Capitol Federal Financial

Pacific Premier Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Premier Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Pacific Premier is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Capitol Federal Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Federal Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Capitol Federal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Pacific Premier and Capitol Federal

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

The idea behind Pacific Premier Bancorp and Capitol Federal 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.