Correlation Between Mercantile Bank and Univest Pennsylvania
Can any of the company-specific risk be diversified away by investing in both Mercantile Bank 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 Mercantile Bank and Univest Pennsylvania into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercantile Bank and Univest Pennsylvania, you can compare the effects of market volatilities on Mercantile Bank 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 Mercantile Bank with a short position of Univest Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercantile Bank and Univest Pennsylvania.
Diversification Opportunities for Mercantile Bank and Univest Pennsylvania
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mercantile and Univest is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Mercantile Bank and Univest Pennsylvania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Univest Pennsylvania and Mercantile Bank 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 Mercantile Bank 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 Mercantile Bank i.e., Mercantile Bank and Univest Pennsylvania go up and down completely randomly.
Pair Corralation between Mercantile Bank and Univest Pennsylvania
Given the investment horizon of 90 days Mercantile Bank is expected to under-perform the Univest Pennsylvania. In addition to that, Mercantile Bank is 1.18 times more volatile than Univest Pennsylvania. It trades about -0.02 of its total potential returns per unit of risk. Univest Pennsylvania is currently generating about 0.05 per unit of volatility. If you would invest 3,018 in Univest Pennsylvania on December 2, 2024 and sell it today you would earn a total of 38.00 from holding Univest Pennsylvania or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercantile Bank vs. Univest Pennsylvania
Performance |
| Timeline |
| Mercantile Bank |
| Univest Pennsylvania |
Mercantile Bank and Univest Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercantile Bank and Univest Pennsylvania
The main advantage of trading using opposite Mercantile Bank and Univest Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercantile Bank 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.| Mercantile Bank vs. Great Southern Bancorp | ||
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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