Correlation Between German American and ST Bancorp
Can any of the company-specific risk be diversified away by investing in both German American and ST 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 German American and ST Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between German American Bancorp and ST Bancorp, you can compare the effects of market volatilities on German American and ST 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 German American with a short position of ST Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of German American and ST Bancorp.
Diversification Opportunities for German American and ST Bancorp
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between German and STBA is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding German American Bancorp and ST Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ST Bancorp and German American 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 German American Bancorp are associated (or correlated) with ST Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ST Bancorp has no effect on the direction of German American i.e., German American and ST Bancorp go up and down completely randomly.
Pair Corralation between German American and ST Bancorp
Given the investment horizon of 90 days German American Bancorp is expected to under-perform the ST Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, German American Bancorp is 1.17 times less risky than ST Bancorp. The stock trades about -0.02 of its potential returns per unit of risk. The ST Bancorp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,847 in ST Bancorp on September 10, 2025 and sell it today you would earn a total of 165.00 from holding ST Bancorp or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
German American Bancorp vs. ST Bancorp
Performance |
| Timeline |
| German American Bancorp |
| ST Bancorp |
German American and ST Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with German American and ST Bancorp
The main advantage of trading using opposite German American and ST Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if German American position performs unexpectedly, ST 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 ST Bancorp will offset losses from the drop in ST Bancorp's long position.| German American vs. Lakeland Financial | German American vs. TriCo Bancshares | German American vs. 1st Source | German American vs. Stellar Bancorp, |
| ST Bancorp vs. 1st Source | ST Bancorp vs. TriCo Bancshares | ST Bancorp vs. Lakeland Financial | ST Bancorp vs. Merchants Bancorp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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