Correlation Between Summit Bancshares and Pioneer Bankcorp

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

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

Diversification Opportunities for Summit Bancshares and Pioneer Bankcorp

0.47

Correlation Coefficient

Summit Bancshares  Pioneer Bankcorp

Very weak diversification

The 3 months correlation between Summit and Pioneer is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Summit Bancshares and Pioneer Bankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Bankcorp and Summit Bancshares 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 Summit Bancshares are associated (or correlated) with Pioneer Bankcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Bankcorp has no effect on the direction of Summit Bancshares i.e., Summit Bancshares and Pioneer Bankcorp go up and down completely randomly.

Pair Corralation between Summit Bancshares and Pioneer Bankcorp

Given the investment horizon of 90 days Summit Bancshares is expected to generate 1.52 times more return on investment than Pioneer Bankcorp. However, Summit Bancshares is 1.52 times more volatile than Pioneer Bankcorp. It trades about 0.04 of its potential returns per unit of risk. Pioneer Bankcorp is currently generating about 0.04 per unit of risk. If you would invest  4,421  in Summit Bancshares on December 29, 2024 and sell it today you would earn a total of  129.00  from holding Summit Bancshares or generate 2.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Summit Bancshares  vs.  Pioneer Bankcorp

Summit Bancshares

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Bancshares are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Summit Bancshares is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pioneer Bankcorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Bankcorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking signals, Pioneer Bankcorp is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Summit Bancshares and Pioneer Bankcorp

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

The idea behind Summit Bancshares and Pioneer Bankcorp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.