Correlation Between Bank of Marin and Valley National
Can any of the company-specific risk be diversified away by investing in both Bank of Marin and Valley National 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 Bank of Marin and Valley National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Marin and Valley National Bancorp, you can compare the effects of market volatilities on Bank of Marin and Valley National 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 Bank of Marin with a short position of Valley National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Marin and Valley National.
Diversification Opportunities for Bank of Marin and Valley National
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Valley is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Marin and Valley National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valley National Bancorp and Bank of Marin 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 Bank of Marin are associated (or correlated) with Valley National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valley National Bancorp has no effect on the direction of Bank of Marin i.e., Bank of Marin and Valley National go up and down completely randomly.
Pair Corralation between Bank of Marin and Valley National
Given the investment horizon of 90 days Bank of Marin is expected to generate 1.39 times more return on investment than Valley National. However, Bank of Marin is 1.39 times more volatile than Valley National Bancorp. It trades about 0.16 of its potential returns per unit of risk. Valley National Bancorp is currently generating about 0.19 per unit of risk. If you would invest 2,268 in Bank of Marin on August 30, 2024 and sell it today you would earn a total of 291.00 from holding Bank of Marin or generate 12.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Marin vs. Valley National Bancorp
Performance |
| Timeline |
| Bank of Marin |
| Valley National Bancorp |
Bank of Marin and Valley National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Marin and Valley National
The main advantage of trading using opposite Bank of Marin and Valley National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Marin position performs unexpectedly, Valley National 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 Valley National will offset losses from the drop in Valley National's long position.| Bank of Marin vs. SVB T Corp | Bank of Marin vs. First Capital | Bank of Marin vs. Pioneer Bankcorp | Bank of Marin vs. Liberty Northwest Bancorp |
| Valley National vs. Fulton Financial | Valley National vs. Webster Financial | Valley National vs. United Bankshares | Valley National vs. FNB Corp |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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