Correlation Between Sandy Spring and Renasant

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

Diversification Opportunities for Sandy Spring and Renasant

0.65

Correlation Coefficient

Sandy Spring  Renasant

Poor diversification

The 3 months correlation between Sandy and Renasant is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sandy Spring Bancorp and Renasant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renasant 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 Renasant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renasant has no effect on the direction of Sandy Spring i.e., Sandy Spring and Renasant go up and down completely randomly.

Pair Corralation between Sandy Spring and Renasant

Given the investment horizon of 90 days Sandy Spring Bancorp is expected to under-perform the Renasant. In addition to that, Sandy Spring is 1.12 times more volatile than Renasant. It trades about -0.16 of its total potential returns per unit of risk. Renasant is currently generating about -0.01 per unit of volatility. If you would invest  3,551  in Renasant on December 29, 2024 and sell it today you would lose (48.00) from holding Renasant or give up 1.35% 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.  Renasant

Sandy Spring Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sandy Spring Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Renasant

Risk-Adjusted Performance

Very Weak

Over the last 90 days Renasant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Renasant is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sandy Spring and Renasant

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

The idea behind Sandy Spring Bancorp and Renasant 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.