Correlation Between SpareBank and Eastern

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

By analyzing existing cross correlation between SpareBank 1 SR Bank and Eastern Co, you can compare the effects of market volatilities on SpareBank and Eastern 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 SpareBank with a short position of Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of SpareBank and Eastern.

Diversification Opportunities for SpareBank and Eastern

0.0

Correlation Coefficient

SpareBank  Eastern

Pay attention - limited upside

The 3 months correlation between SpareBank and Eastern is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SpareBank 1 SR Bank and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern and SpareBank 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 SpareBank 1 SR Bank are associated (or correlated) with Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of SpareBank i.e., SpareBank and Eastern go up and down completely randomly.

Pair Corralation between SpareBank and Eastern

If you would invest  1,465  in SpareBank 1 SR Bank on October 6, 2024 and sell it today you would earn a total of  0.00  from holding SpareBank 1 SR Bank or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SpareBank 1 SR Bank  vs.  Eastern Co

SpareBank 1 SR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SpareBank 1 SR Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, SpareBank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with SpareBank and Eastern

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

The idea behind SpareBank 1 SR Bank and Eastern Co 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.