Correlation Between Alpha Bank and United Bankshares
Can any of the company-specific risk be diversified away by investing in both Alpha Bank and United Bankshares 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 Alpha Bank and United Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alpha Bank SA and United Bankshares, you can compare the effects of market volatilities on Alpha Bank and United Bankshares 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 Alpha Bank with a short position of United Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Bank and United Bankshares.
Diversification Opportunities for Alpha Bank and United Bankshares
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alpha and United is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Bank SA and United Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bankshares and Alpha Bank 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 Alpha Bank SA are associated (or correlated) with United Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bankshares has no effect on the direction of Alpha Bank i.e., Alpha Bank and United Bankshares go up and down completely randomly.
Pair Corralation between Alpha Bank and United Bankshares
Assuming the 90 days horizon Alpha Bank SA is expected to generate 1.59 times more return on investment than United Bankshares. However, Alpha Bank is 1.59 times more volatile than United Bankshares. It trades about 0.19 of its potential returns per unit of risk. United Bankshares is currently generating about 0.08 per unit of risk. If you would invest 38.00 in Alpha Bank SA on October 29, 2024 and sell it today you would earn a total of 3.00 from holding Alpha Bank SA or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alpha Bank SA vs. United Bankshares
Performance |
| Timeline |
| Alpha Bank SA |
| United Bankshares |
Alpha Bank and United Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alpha Bank and United Bankshares
The main advantage of trading using opposite Alpha Bank and United Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Bank position performs unexpectedly, United Bankshares 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 United Bankshares will offset losses from the drop in United Bankshares' long position.| Alpha Bank vs. First Hawaiian | Alpha Bank vs. Central Pacific Financial | Alpha Bank vs. Territorial Bancorp | Alpha Bank vs. Comerica |
| United Bankshares vs. Peoples Bancorp | United Bankshares vs. Eagle Bancorp | United Bankshares vs. Northrim BanCorp | United Bankshares vs. Pacific Premier 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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