Correlation Between Merchants Bancorp and United Community
Can any of the company-specific risk be diversified away by investing in both Merchants Bancorp 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 Merchants Bancorp and United Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merchants Bancorp and United Community Banks, you can compare the effects of market volatilities on Merchants Bancorp 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 Merchants Bancorp with a short position of United Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merchants Bancorp and United Community.
Diversification Opportunities for Merchants Bancorp and United Community
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merchants and United is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Merchants Bancorp 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 Merchants Bancorp 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 Merchants Bancorp 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 Merchants Bancorp i.e., Merchants Bancorp and United Community go up and down completely randomly.
Pair Corralation between Merchants Bancorp and United Community
If you would invest 2,599 in Merchants Bancorp on November 8, 2024 and sell it today you would earn a total of 11.00 from holding Merchants Bancorp or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Merchants Bancorp vs. United Community Banks
Performance |
| Timeline |
| Merchants Bancorp |
| United Community Banks |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merchants Bancorp and United Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merchants Bancorp and United Community
The main advantage of trading using opposite Merchants Bancorp and United Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merchants Bancorp 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.The idea behind Merchants Bancorp and United Community Banks 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.| United Community vs. Pinnacle Financial Partners | United Community vs. Wintrust Financial Corp | United Community vs. Heartland Financial USA | United Community vs. OceanFirst Financial 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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