Correlation Between WVS Financial and Sandy Spring

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

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

Diversification Opportunities for WVS Financial and Sandy Spring

-0.32

Correlation Coefficient

WVS Financial  Sandy Spring

Very good diversification

The 3 months correlation between WVS and Sandy is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding WVS Financial Corp and Sandy Spring Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandy Spring Bancorp and WVS 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 WVS Financial Corp are associated (or correlated) with Sandy Spring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandy Spring Bancorp has no effect on the direction of WVS Financial i.e., WVS Financial and Sandy Spring go up and down completely randomly.

Pair Corralation between WVS Financial and Sandy Spring

If you would invest  2,263  in Sandy Spring Bancorp on September 3, 2024 and sell it today you would earn a total of  1,505  from holding Sandy Spring Bancorp or generate 66.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.4%
Values	Daily Returns

WVS Financial Corp  vs.  Sandy Spring Bancorp

WVS Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WVS Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, WVS Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sandy Spring Bancorp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sandy Spring Bancorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Sandy Spring reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WVS Financial and Sandy Spring

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

The idea behind WVS Financial Corp and Sandy Spring 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.