Correlation Between Stellar Bancorp, and TransAct Technologies

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

By analyzing existing cross correlation between Stellar Bancorp, and TransAct Technologies Incorporated, you can compare the effects of market volatilities on Stellar Bancorp, and TransAct Technologies 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 Stellar Bancorp, with a short position of TransAct Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar Bancorp, and TransAct Technologies.

Diversification Opportunities for Stellar Bancorp, and TransAct Technologies

0.4

Correlation Coefficient

Stellar Bancorp,  TransAct Technologies

Very weak diversification

The 3 months correlation between Stellar and TransAct is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Stellar Bancorp, and TransAct Technologies Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAct Technologies and Stellar 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 Stellar Bancorp, are associated (or correlated) with TransAct Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAct Technologies has no effect on the direction of Stellar Bancorp, i.e., Stellar Bancorp, and TransAct Technologies go up and down completely randomly.

Pair Corralation between Stellar Bancorp, and TransAct Technologies

Given the investment horizon of 90 days Stellar Bancorp, is expected to generate 0.68 times more return on investment than TransAct Technologies. However, Stellar Bancorp, is 1.46 times less risky than TransAct Technologies. It trades about -0.02 of its potential returns per unit of risk. TransAct Technologies Incorporated is currently generating about -0.05 per unit of risk. If you would invest  2,822  in Stellar Bancorp, on December 29, 2024 and sell it today you would lose (72.00) from holding Stellar Bancorp, or give up 2.55% of portfolio value over 90 days.

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

Stellar Bancorp,  vs.  TransAct Technologies Incorpor

Stellar Bancorp,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stellar Bancorp, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Stellar Bancorp, is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

TransAct Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days TransAct Technologies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Stellar Bancorp, and TransAct Technologies

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

The idea behind Stellar Bancorp, and TransAct Technologies Incorporated 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .