Correlation Between Savi Financial and Harbor Bankshares

Can any of the company-specific risk be diversified away by investing in both Savi Financial and Harbor Bankshares 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 Savi Financial and Harbor Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Savi Financial and Harbor Bankshares

0.82

Correlation Coefficient

Savi Financial  Harbor Bankshares

Very poor diversification

The 3 months correlation between Savi and Harbor is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Savi Financial and Harbor Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Bankshares and Savi 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 Savi Financial are associated (or correlated) with Harbor Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Bankshares has no effect on the direction of Savi Financial i.e., Savi Financial and Harbor Bankshares go up and down completely randomly.

Pair Corralation between Savi Financial and Harbor Bankshares

Given the investment horizon of 90 days Savi Financial is expected to generate 0.11 times more return on investment than Harbor Bankshares. However, Savi Financial is 9.27 times less risky than Harbor Bankshares. It trades about 0.1 of its potential returns per unit of risk. Harbor Bankshares is currently generating about -0.03 per unit of risk. If you would invest  1,505  in Savi Financial on October 11, 2024 and sell it today you would earn a total of  5.00  from holding Savi Financial or generate 0.33% return on investment over 90 days.

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

Savi Financial  vs.  Harbor Bankshares

Savi Financial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Savi Financial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Savi Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Harbor Bankshares

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Bankshares are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, Harbor Bankshares may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Savi Financial and Harbor Bankshares

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

The idea behind Savi Financial and Harbor Bankshares 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.