Correlation Between ECB Bancorp and Sound Financial
Can any of the company-specific risk be diversified away by investing in both ECB Bancorp and Sound 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 ECB Bancorp and Sound Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECB Bancorp and Sound Financial Bancorp, you can compare the effects of market volatilities on ECB Bancorp and Sound 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 ECB Bancorp with a short position of Sound Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECB Bancorp and Sound Financial.
Diversification Opportunities for ECB Bancorp and Sound Financial
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ECB and Sound is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ECB Bancorp and Sound Financial Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Financial Bancorp and ECB 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 ECB Bancorp are associated (or correlated) with Sound Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Financial Bancorp has no effect on the direction of ECB Bancorp i.e., ECB Bancorp and Sound Financial go up and down completely randomly.
Pair Corralation between ECB Bancorp and Sound Financial
Given the investment horizon of 90 days ECB Bancorp is expected to under-perform the Sound Financial. In addition to that, ECB Bancorp is 1.13 times more volatile than Sound Financial Bancorp. It trades about -0.02 of its total potential returns per unit of risk. Sound Financial Bancorp is currently generating about -0.01 per unit of volatility. If you would invest 4,591 in Sound Financial Bancorp on July 24, 2025 and sell it today you would lose (45.00) from holding Sound Financial Bancorp or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECB Bancorp vs. Sound Financial Bancorp
Performance |
| Timeline |
| ECB Bancorp |
| Sound Financial Bancorp |
ECB Bancorp and Sound Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECB Bancorp and Sound Financial
The main advantage of trading using opposite ECB Bancorp and Sound Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECB Bancorp position performs unexpectedly, Sound 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 Sound Financial will offset losses from the drop in Sound Financial's long position.| ECB Bancorp vs. Finward Bancorp | ECB Bancorp vs. Eagle Bancorp Montana | ECB Bancorp vs. Richmond Mutual Bancorporation | ECB Bancorp vs. BCB Bancorp |
| Sound Financial vs. Affinity Bancshares | Sound Financial vs. Riverview Bancorp | Sound Financial vs. SR Bancorp, Common | Sound Financial vs. Union Bankshares |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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