Correlation Between Sound Financial and HarborOne Bancorp

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

Diversification Opportunities for Sound Financial and HarborOne Bancorp

-0.01

Correlation Coefficient

Sound Financial  HarborOne Bancorp

Good diversification

The 3 months correlation between Sound and HarborOne is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sound Financial Bancorp and HarborOne Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HarborOne Bancorp 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 HarborOne Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HarborOne Bancorp has no effect on the direction of Sound Financial i.e., Sound Financial and HarborOne Bancorp go up and down completely randomly.

Pair Corralation between Sound Financial and HarborOne Bancorp

Given the investment horizon of 90 days Sound Financial Bancorp is expected to under-perform the HarborOne Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Sound Financial Bancorp is 1.95 times less risky than HarborOne Bancorp. The stock trades about -0.01 of its potential returns per unit of risk. The HarborOne Bancorp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,280  in HarborOne Bancorp on September 3, 2024 and sell it today you would earn a total of  8.00  from holding HarborOne Bancorp or generate 0.63% 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.  HarborOne Bancorp

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.

HarborOne Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HarborOne Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, HarborOne Bancorp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sound Financial and HarborOne Bancorp

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

The idea behind Sound Financial Bancorp and HarborOne 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.