Correlation Between Santa Cruz and 1st Capital

Can any of the company-specific risk be diversified away by investing in both Santa Cruz and 1st Capital 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 Santa Cruz and 1st Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Santa Cruz County and 1st Capital Bank, you can compare the effects of market volatilities on Santa Cruz and 1st Capital 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 Santa Cruz with a short position of 1st Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santa Cruz and 1st Capital.

Diversification Opportunities for Santa Cruz and 1st Capital

0.39

Correlation Coefficient

Santa Cruz  1st Capital

Weak diversification

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

Pair Corralation between Santa Cruz and 1st Capital

If you would invest  3,807  in Santa Cruz County on September 3, 2024 and sell it today you would earn a total of  343.00  from holding Santa Cruz County or generate 9.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Santa Cruz County  vs.  1st Capital Bank

Santa Cruz County

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Santa Cruz County are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Santa Cruz is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

1st Capital Bank

Risk-Adjusted Performance

0 of 100

Very Strong

Over the last 90 days 1st Capital Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat conflicting basic indicators, 1st Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Santa Cruz and 1st Capital

The main advantage of trading using opposite Santa Cruz and 1st Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santa Cruz position performs unexpectedly, 1st Capital 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 1st Capital will offset losses from the drop in 1st Capital's long position.

The idea behind Santa Cruz County and 1st Capital Bank 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.