Correlation Between Sandy Spring and Home BancShares
Can any of the company-specific risk be diversified away by investing in both Sandy Spring and Home BancShares 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 Sandy Spring and Home BancShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandy Spring Bancorp and Home BancShares, you can compare the effects of market volatilities on Sandy Spring and Home BancShares 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 Sandy Spring with a short position of Home BancShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandy Spring and Home BancShares.
Diversification Opportunities for Sandy Spring and Home BancShares
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sandy and Home is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sandy Spring Bancorp and Home BancShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home BancShares and Sandy Spring 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 Sandy Spring Bancorp are associated (or correlated) with Home BancShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home BancShares has no effect on the direction of Sandy Spring i.e., Sandy Spring and Home BancShares go up and down completely randomly.
Pair Corralation between Sandy Spring and Home BancShares
Given the investment horizon of 90 days Sandy Spring Bancorp is expected to under-perform the Home BancShares. In addition to that, Sandy Spring is 1.41 times more volatile than Home BancShares. It trades about -0.12 of its total potential returns per unit of risk. Home BancShares is currently generating about 0.0 per unit of volatility. If you would invest 3,000 in Home BancShares on December 2, 2024 and sell it today you would lose (5.00) from holding Home BancShares or give up 0.17% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Sandy Spring Bancorp vs. Home BancShares
Performance |
Timeline |
Sandy Spring Bancorp |
Home BancShares |
Sandy Spring and Home BancShares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sandy Spring and Home BancShares
The main advantage of trading using opposite Sandy Spring and Home BancShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandy Spring position performs unexpectedly, Home BancShares 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 Home BancShares will offset losses from the drop in Home BancShares' long position.Sandy Spring vs. Northrim BanCorp | Sandy Spring vs. Provident Financial Services | Sandy Spring vs. Community Trust Bancorp | Sandy Spring vs. First Interstate BancSystem |
Home BancShares vs. Community West Bancshares | Home BancShares vs. First Financial Northwest | Home BancShares vs. First Northwest Bancorp | Home BancShares vs. First Capital |
Check out your portfolio center.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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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