Correlation Between Sound Financial and First Bancshares,

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

By analyzing existing cross correlation between Sound Financial Bancorp and The First Bancshares,, you can compare the effects of market volatilities on Sound Financial and First 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 Sound Financial with a short position of First Bancshares,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sound Financial and First Bancshares,.

Diversification Opportunities for Sound Financial and First Bancshares,

-0.04

Correlation Coefficient

Sound Financial  First Bancshares,

Good diversification

The 3 months correlation between Sound and First is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sound Financial Bancorp and The First Bancshares, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancshares, and Sound Financial 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 Sound Financial Bancorp are associated (or correlated) with First Bancshares,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancshares, has no effect on the direction of Sound Financial i.e., Sound Financial and First Bancshares, go up and down completely randomly.

Pair Corralation between Sound Financial and First Bancshares,

Given the investment horizon of 90 days Sound Financial is expected to generate 28.72 times less return on investment than First Bancshares,. But when comparing it to its historical volatility, Sound Financial Bancorp is 1.63 times less risky than First Bancshares,. It trades about 0.01 of its potential returns per unit of risk. The First Bancshares, is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,299  in The First Bancshares, on September 4, 2024 and sell it today you would earn a total of  426.00  from holding The First Bancshares, or generate 12.91% return on investment over 90 days.

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

Sound Financial Bancorp  vs.  The First Bancshares,

Sound Financial Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sound Financial Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Sound Financial is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

First Bancshares,

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The First Bancshares, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, First Bancshares, unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sound Financial and First Bancshares,

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

The idea behind Sound Financial Bancorp and The First Bancshares, 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.