Correlation Between ST Bancorp and Washington Federal
Can any of the company-specific risk be diversified away by investing in both ST Bancorp and Washington Federal 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 ST Bancorp and Washington Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ST Bancorp and Washington Federal, you can compare the effects of market volatilities on ST Bancorp and Washington Federal 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 ST Bancorp with a short position of Washington Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of ST Bancorp and Washington Federal.
Diversification Opportunities for ST Bancorp and Washington Federal
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between STBA and Washington is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ST Bancorp and Washington Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Federal and ST 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 ST Bancorp are associated (or correlated) with Washington Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Federal has no effect on the direction of ST Bancorp i.e., ST Bancorp and Washington Federal go up and down completely randomly.
Pair Corralation between ST Bancorp and Washington Federal
Given the investment horizon of 90 days ST Bancorp is expected to generate 0.99 times more return on investment than Washington Federal. However, ST Bancorp is 1.01 times less risky than Washington Federal. It trades about 0.05 of its potential returns per unit of risk. Washington Federal is currently generating about 0.02 per unit of risk. If you would invest 2,734 in ST Bancorp on August 26, 2025 and sell it today you would earn a total of 1,215 from holding ST Bancorp or generate 44.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ST Bancorp vs. Washington Federal
Performance |
| Timeline |
| ST Bancorp |
| Washington Federal |
ST Bancorp and Washington Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ST Bancorp and Washington Federal
The main advantage of trading using opposite ST Bancorp and Washington Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ST Bancorp position performs unexpectedly, Washington Federal 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 Washington Federal will offset losses from the drop in Washington Federal's long position.| ST Bancorp vs. 1st Source | ST Bancorp vs. TriCo Bancshares | ST Bancorp vs. Lakeland Financial | ST Bancorp vs. Merchants Bancorp |
| Washington Federal vs. Trustmark | Washington Federal vs. Provident Financial Services | Washington Federal vs. First Financial Bancorp | Washington Federal vs. Western Alliance Bancorporation |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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