Correlation Between Banc Of and United Community
Can any of the company-specific risk be diversified away by investing in both Banc Of and United Community 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 Banc Of and United Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banc of California and United Community Banks,, you can compare the effects of market volatilities on Banc Of and United Community 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 Banc Of with a short position of United Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banc Of and United Community.
Diversification Opportunities for Banc Of and United Community
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banc and United is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Banc of California and United Community Banks, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Community Banks, and Banc Of 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 Banc of California are associated (or correlated) with United Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Community Banks, has no effect on the direction of Banc Of i.e., Banc Of and United Community go up and down completely randomly.
Pair Corralation between Banc Of and United Community
Assuming the 90 days trading horizon Banc Of is expected to generate 3.47 times less return on investment than United Community. But when comparing it to its historical volatility, Banc of California is 5.83 times less risky than United Community. It trades about 0.43 of its potential returns per unit of risk. United Community Banks, is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,846 in United Community Banks, on September 1, 2024 and sell it today you would earn a total of 535.00 from holding United Community Banks, or generate 18.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banc of California vs. United Community Banks,
Performance |
| Timeline |
| Banc of California |
| United Community Banks, |
Banc Of and United Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banc Of and United Community
The main advantage of trading using opposite Banc Of and United Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banc Of position performs unexpectedly, United Community 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 Community will offset losses from the drop in United Community's long position.| Banc Of vs. SunOpta | Banc Of vs. BBB Foods | Banc Of vs. Broadstone Net Lease | Banc Of vs. FitLife Brands, Common |
| United Community vs. Boston Omaha Corp | United Community vs. ServiceNow | United Community vs. WiMi Hologram Cloud | United Community vs. Stagwell |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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