Correlation Between Sandy Spring and Trustmark

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

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

Diversification Opportunities for Sandy Spring and Trustmark

0.65

Correlation Coefficient

Sandy Spring  Trustmark

Poor diversification

The 3 months correlation between Sandy and Trustmark is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sandy Spring Bancorp and Trustmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trustmark and Sandy Spring 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 Sandy Spring Bancorp are associated (or correlated) with Trustmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trustmark has no effect on the direction of Sandy Spring i.e., Sandy Spring and Trustmark go up and down completely randomly.

Pair Corralation between Sandy Spring and Trustmark

Given the investment horizon of 90 days Sandy Spring Bancorp is expected to under-perform the Trustmark. But the stock apears to be less risky and, when comparing its historical volatility, Sandy Spring Bancorp is 1.03 times less risky than Trustmark. The stock trades about -0.08 of its potential returns per unit of risk. The Trustmark is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,299  in Trustmark on January 9, 2025 and sell it today you would lose (220.00) from holding Trustmark or give up 6.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	91.8%
Values	Daily Returns

Sandy Spring Bancorp  vs.  Trustmark

Sandy Spring Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sandy Spring Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Trustmark

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trustmark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Trustmark is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sandy Spring and Trustmark

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

The idea behind Sandy Spring Bancorp and Trustmark 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.