Correlation Between Southern California and Amerant Bancorp

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

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

Diversification Opportunities for Southern California and Amerant Bancorp

0.75

Correlation Coefficient

Southern California  Amerant Bancorp

Poor diversification

The 3 months correlation between Southern and Amerant is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Southern California Bancorp and Amerant Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amerant Bancorp and Southern California 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 Southern California Bancorp are associated (or correlated) with Amerant Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amerant Bancorp has no effect on the direction of Southern California i.e., Southern California and Amerant Bancorp go up and down completely randomly.

Pair Corralation between Southern California and Amerant Bancorp

Given the investment horizon of 90 days Southern California is expected to generate 5.74 times less return on investment than Amerant Bancorp. But when comparing it to its historical volatility, Southern California Bancorp is 1.08 times less risky than Amerant Bancorp. It trades about 0.01 of its potential returns per unit of risk. Amerant Bancorp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,735  in Amerant Bancorp on May 6, 2025 and sell it today you would earn a total of  126.00  from holding Amerant Bancorp or generate 7.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Southern California Bancorp  vs.  Amerant Bancorp

Southern California

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Southern California Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Southern California is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Amerant Bancorp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amerant Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Amerant Bancorp may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Southern California and Amerant Bancorp

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

The idea behind Southern California Bancorp and Amerant 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.