Correlation Between International Bancshares and Union Bankshares
Can any of the company-specific risk be diversified away by investing in both International Bancshares and Union 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 International Bancshares and Union Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Bancshares and Union Bankshares, you can compare the effects of market volatilities on International Bancshares and Union 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 International Bancshares with a short position of Union Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Bancshares and Union Bankshares.
Diversification Opportunities for International Bancshares and Union Bankshares
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between International and Union is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding International Bancshares and Union Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bankshares and International Bancshares 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 International Bancshares are associated (or correlated) with Union Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Bankshares has no effect on the direction of International Bancshares i.e., International Bancshares and Union Bankshares go up and down completely randomly.
Pair Corralation between International Bancshares and Union Bankshares
Given the investment horizon of 90 days International Bancshares is expected to generate 1.66 times less return on investment than Union Bankshares. In addition to that, International Bancshares is 1.51 times more volatile than Union Bankshares. It trades about 0.21 of its total potential returns per unit of risk. Union Bankshares is currently generating about 0.53 per unit of volatility. If you would invest 2,865 in Union Bankshares on September 5, 2024 and sell it today you would earn a total of 905.00 from holding Union Bankshares or generate 31.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Bancshares vs. Union Bankshares
Performance |
| Timeline |
| International Bancshares |
| Union Bankshares |
International Bancshares and Union Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Bancshares and Union Bankshares
The main advantage of trading using opposite International Bancshares and Union Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Bancshares position performs unexpectedly, Union 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 Union Bankshares will offset losses from the drop in Union Bankshares' long position.The idea behind International Bancshares and Union Bankshares pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Union Bankshares vs. Home Bancorp | Union Bankshares vs. Rhinebeck Bancorp | Union Bankshares vs. LINKBANCORP | Union Bankshares vs. Magyar 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |