Correlation Between SVB T and Touchmark Bancshares

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

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

Diversification Opportunities for SVB T and Touchmark Bancshares

0.73

Correlation Coefficient

SVB T  Touchmark Bancshares

Poor diversification

The 3 months correlation between SVB and Touchmark is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SVB T Corp and Touchmark Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchmark Bancshares and SVB T 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 SVB T Corp are associated (or correlated) with Touchmark Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchmark Bancshares has no effect on the direction of SVB T i.e., SVB T and Touchmark Bancshares go up and down completely randomly.

Pair Corralation between SVB T and Touchmark Bancshares

Given the investment horizon of 90 days SVB T is expected to generate 5.79 times less return on investment than Touchmark Bancshares. But when comparing it to its historical volatility, SVB T Corp is 5.05 times less risky than Touchmark Bancshares. It trades about 0.12 of its potential returns per unit of risk. Touchmark Bancshares is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  785.00  in Touchmark Bancshares on December 5, 2024 and sell it today you would earn a total of  115.00  from holding Touchmark Bancshares or generate 14.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	89.83%
Values	Daily Returns

SVB T Corp  vs.  Touchmark Bancshares

SVB T Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SVB T Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, SVB T is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Touchmark Bancshares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Touchmark Bancshares are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Touchmark Bancshares disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SVB T and Touchmark Bancshares

The main advantage of trading using opposite SVB T and Touchmark Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SVB T position performs unexpectedly, Touchmark 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 Touchmark Bancshares will offset losses from the drop in Touchmark Bancshares' long position.

The idea behind SVB T Corp and Touchmark 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.