Correlation Between Pacific Premier and Hanover Bancorp

Can any of the company-specific risk be diversified away by investing in both Pacific Premier and Hanover Bancorp 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 Hanover Bancorp 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 Hanover Bancorp, you can compare the effects of market volatilities on Pacific Premier and Hanover Bancorp 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 Hanover Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Premier and Hanover Bancorp.

Diversification Opportunities for Pacific Premier and Hanover Bancorp

0.29

Correlation Coefficient

Pacific Premier  Hanover Bancorp

Modest diversification

The 3 months correlation between Pacific and Hanover is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Premier Bancorp and Hanover Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Bancorp 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 Hanover Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover Bancorp has no effect on the direction of Pacific Premier i.e., Pacific Premier and Hanover Bancorp go up and down completely randomly.

Pair Corralation between Pacific Premier and Hanover Bancorp

Given the investment horizon of 90 days Pacific Premier Bancorp is expected to under-perform the Hanover Bancorp. In addition to that, Pacific Premier is 1.31 times more volatile than Hanover Bancorp. It trades about 0.0 of its total potential returns per unit of risk. Hanover Bancorp is currently generating about 0.2 per unit of volatility. If you would invest  1,920  in Hanover Bancorp on October 20, 2024 and sell it today you would earn a total of  525.00  from holding Hanover Bancorp or generate 27.34% return on investment over 90 days.

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

Pacific Premier Bancorp  vs.  Hanover Bancorp

Pacific Premier Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacific Premier Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Hanover Bancorp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hanover Bancorp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Hanover Bancorp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pacific Premier and Hanover Bancorp

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

The idea behind Pacific Premier Bancorp and Hanover Bancorp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.