Correlation Between First Business and Univest Pennsylvania
Can any of the company-specific risk be diversified away by investing in both First Business and Univest Pennsylvania 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 First Business and Univest Pennsylvania into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Business Financial and Univest Pennsylvania, you can compare the effects of market volatilities on First Business and Univest Pennsylvania 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 First Business with a short position of Univest Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Business and Univest Pennsylvania.
Diversification Opportunities for First Business and Univest Pennsylvania
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Univest is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding First Business Financial and Univest Pennsylvania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Univest Pennsylvania and First Business 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 First Business Financial are associated (or correlated) with Univest Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Univest Pennsylvania has no effect on the direction of First Business i.e., First Business and Univest Pennsylvania go up and down completely randomly.
Pair Corralation between First Business and Univest Pennsylvania
Given the investment horizon of 90 days First Business Financial is expected to generate 1.01 times more return on investment than Univest Pennsylvania. However, First Business is 1.01 times more volatile than Univest Pennsylvania. It trades about 0.04 of its potential returns per unit of risk. Univest Pennsylvania is currently generating about 0.03 per unit of risk. If you would invest 3,536 in First Business Financial on August 30, 2024 and sell it today you would earn a total of 1,515 from holding First Business Financial or generate 42.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Business Financial vs. Univest Pennsylvania
Performance |
| Timeline |
| First Business Financial |
| Univest Pennsylvania |
First Business and Univest Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Business and Univest Pennsylvania
The main advantage of trading using opposite First Business and Univest Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Business position performs unexpectedly, Univest Pennsylvania 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 Univest Pennsylvania will offset losses from the drop in Univest Pennsylvania's long position.| First Business vs. Home Federal Bancorp | First Business vs. Lake Shore Bancorp | First Business vs. Old Point Financial | First Business vs. Parke Bancorp |
| Univest Pennsylvania vs. Waterstone Financial | Univest Pennsylvania vs. Mid Penn Bancorp | Univest Pennsylvania vs. ST Bancorp | Univest Pennsylvania vs. Republic 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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