Correlation Between Sandy Spring and ST Bancorp

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

Diversification Opportunities for Sandy Spring and ST Bancorp

0.63

Correlation Coefficient

Sandy Spring  ST Bancorp

Poor diversification

The 3 months correlation between Sandy and STBA is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sandy Spring Bancorp and ST Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ST Bancorp 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 ST Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ST Bancorp has no effect on the direction of Sandy Spring i.e., Sandy Spring and ST Bancorp go up and down completely randomly.

Pair Corralation between Sandy Spring and ST Bancorp

Given the investment horizon of 90 days Sandy Spring Bancorp is expected to generate 1.01 times more return on investment than ST Bancorp. However, Sandy Spring is 1.01 times more volatile than ST Bancorp. It trades about 0.11 of its potential returns per unit of risk. ST Bancorp is currently generating about 0.03 per unit of risk. If you would invest  3,185  in Sandy Spring Bancorp on September 13, 2024 and sell it today you would earn a total of  547.00  from holding Sandy Spring Bancorp or generate 17.17% return on investment over 90 days.

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

Sandy Spring Bancorp  vs.  ST Bancorp

Sandy Spring Bancorp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sandy Spring Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Sandy Spring reported solid returns over the last few months and may actually be approaching a breakup point.

ST Bancorp

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ST Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, ST Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sandy Spring and ST Bancorp

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

The idea behind Sandy Spring Bancorp and ST 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.