Correlation Between Glacier Bancorp and Small Cap

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

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

Diversification Opportunities for Glacier Bancorp and Small Cap

0.49

Correlation Coefficient

Glacier Bancorp  Small Cap

Very weak diversification

The 3 months correlation between Glacier and Small is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Glacier Bancorp and Small Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Core and Glacier Bancorp 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 Glacier Bancorp are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Core has no effect on the direction of Glacier Bancorp i.e., Glacier Bancorp and Small Cap go up and down completely randomly.

Pair Corralation between Glacier Bancorp and Small Cap

Given the investment horizon of 90 days Glacier Bancorp is expected to under-perform the Small Cap. In addition to that, Glacier Bancorp is 1.32 times more volatile than Small Cap Core. It trades about -0.42 of its total potential returns per unit of risk. Small Cap Core is currently generating about -0.01 per unit of volatility. If you would invest  1,310  in Small Cap Core on March 18, 2024 and sell it today you would lose (5.00) from holding Small Cap Core or give up 0.38% of portfolio value over 90 days.

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

Glacier Bancorp  vs.  Small Cap Core

Glacier Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glacier Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Small Cap Core

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Core are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Small Cap is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Glacier Bancorp and Small Cap

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

The idea behind Glacier Bancorp and Small Cap Core 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.