Correlation Between Peapack Gladstone and Sierra Bancorp

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

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

Diversification Opportunities for Peapack Gladstone and Sierra Bancorp

0.76

Correlation Coefficient

Peapack Gladstone  Sierra Bancorp

Poor diversification

The 3 months correlation between Peapack and Sierra is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Peapack Gladstone Financial and Sierra Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Bancorp and Peapack Gladstone 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 Peapack Gladstone Financial are associated (or correlated) with Sierra Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Bancorp has no effect on the direction of Peapack Gladstone i.e., Peapack Gladstone and Sierra Bancorp go up and down completely randomly.

Pair Corralation between Peapack Gladstone and Sierra Bancorp

Considering the 90-day investment horizon Peapack Gladstone is expected to generate 1.4 times less return on investment than Sierra Bancorp. In addition to that, Peapack Gladstone is 1.0 times more volatile than Sierra Bancorp. It trades about 0.06 of its total potential returns per unit of risk. Sierra Bancorp is currently generating about 0.08 per unit of volatility. If you would invest  2,006  in Sierra Bancorp on September 3, 2024 and sell it today you would earn a total of  1,141  from holding Sierra Bancorp or generate 56.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Peapack Gladstone Financial  vs.  Sierra Bancorp

Peapack Gladstone

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Peapack Gladstone Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Peapack Gladstone exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sierra Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sierra Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Sierra Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Peapack Gladstone and Sierra Bancorp

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

The idea behind Peapack Gladstone Financial and Sierra 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.