Correlation Between Luther Burbank and Waterstone Financial

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

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

Diversification Opportunities for Luther Burbank and Waterstone Financial

0.0

Correlation Coefficient

Luther Burbank  Waterstone Financial

Pay attention - limited upside

The 3 months correlation between Luther and Waterstone is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Luther Burbank and Waterstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waterstone Financial and Luther Burbank 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 Luther Burbank are associated (or correlated) with Waterstone Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waterstone Financial has no effect on the direction of Luther Burbank i.e., Luther Burbank and Waterstone Financial go up and down completely randomly.

Pair Corralation between Luther Burbank and Waterstone Financial

If you would invest  1,462  in Waterstone Financial on September 2, 2024 and sell it today you would earn a total of  47.00  from holding Waterstone Financial or generate 3.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Luther Burbank  vs.  Waterstone Financial

Luther Burbank

Risk-Adjusted Performance

0 of 100

Very Weak

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

Waterstone Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Waterstone Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Waterstone Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Luther Burbank and Waterstone Financial

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

The idea behind Luther Burbank and Waterstone Financial 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.