Correlation Between Waterstone Financial and Partners Bancorp

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

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

Diversification Opportunities for Waterstone Financial and Partners Bancorp

0.39

Correlation Coefficient

Waterstone Financial  Partners Bancorp

Weak diversification

The 3 months correlation between Waterstone and Partners is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Waterstone Financial and Partners Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Partners Bancorp and Waterstone 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 Waterstone Financial are associated (or correlated) with Partners Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Partners Bancorp has no effect on the direction of Waterstone Financial i.e., Waterstone Financial and Partners Bancorp go up and down completely randomly.

Pair Corralation between Waterstone Financial and Partners Bancorp

If you would invest  689.00  in Partners Bancorp on September 20, 2024 and sell it today you would earn a total of  0.00  from holding Partners Bancorp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Waterstone Financial  vs.  Partners Bancorp

Waterstone Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waterstone Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Partners Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Partners Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Partners Bancorp is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Waterstone Financial and Partners Bancorp

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

The idea behind Waterstone Financial and Partners Bancorp 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.