Correlation Between ST Bancorp and Central Pacific
Can any of the company-specific risk be diversified away by investing in both ST Bancorp and Central Pacific 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 ST Bancorp and Central Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ST Bancorp and Central Pacific Financial, you can compare the effects of market volatilities on ST Bancorp and Central Pacific 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 ST Bancorp with a short position of Central Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of ST Bancorp and Central Pacific.
Diversification Opportunities for ST Bancorp and Central Pacific
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STBA and Central is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ST Bancorp and Central Pacific Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Pacific Financial and ST Bancorp 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 ST Bancorp are associated (or correlated) with Central Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Pacific Financial has no effect on the direction of ST Bancorp i.e., ST Bancorp and Central Pacific go up and down completely randomly.
Pair Corralation between ST Bancorp and Central Pacific
Given the investment horizon of 90 days ST Bancorp is expected to generate 0.85 times more return on investment than Central Pacific. However, ST Bancorp is 1.17 times less risky than Central Pacific. It trades about 0.0 of its potential returns per unit of risk. Central Pacific Financial is currently generating about -0.03 per unit of risk. If you would invest 3,804 in ST Bancorp on December 28, 2024 and sell it today you would lose (24.00) from holding ST Bancorp or give up 0.63% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
ST Bancorp vs. Central Pacific Financial
Performance |
Timeline |
ST Bancorp |
Central Pacific Financial |
ST Bancorp and Central Pacific Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ST Bancorp and Central Pacific
The main advantage of trading using opposite ST Bancorp and Central Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ST Bancorp position performs unexpectedly, Central Pacific 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 Central Pacific will offset losses from the drop in Central Pacific's long position.ST Bancorp vs. Enterprise Financial Services | ST Bancorp vs. The First Bancshares, | ST Bancorp vs. First Bancorp | ST Bancorp vs. Home Bancorp |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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