Correlation Between Mid Penn and Veritex Holdings
Can any of the company-specific risk be diversified away by investing in both Mid Penn and Veritex Holdings 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 Mid Penn and Veritex Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Penn Bancorp and Veritex Holdings, you can compare the effects of market volatilities on Mid Penn and Veritex Holdings 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 Mid Penn with a short position of Veritex Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Penn and Veritex Holdings.
Diversification Opportunities for Mid Penn and Veritex Holdings
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mid and Veritex is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Mid Penn Bancorp and Veritex Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veritex Holdings and Mid Penn 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 Mid Penn Bancorp are associated (or correlated) with Veritex Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veritex Holdings has no effect on the direction of Mid Penn i.e., Mid Penn and Veritex Holdings go up and down completely randomly.
Pair Corralation between Mid Penn and Veritex Holdings
Considering the 90-day investment horizon Mid Penn is expected to generate 6.39 times less return on investment than Veritex Holdings. But when comparing it to its historical volatility, Mid Penn Bancorp is 1.79 times less risky than Veritex Holdings. It trades about 0.04 of its potential returns per unit of risk. Veritex Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,759 in Veritex Holdings on August 27, 2024 and sell it today you would earn a total of 248.00 from holding Veritex Holdings or generate 8.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Penn Bancorp vs. Veritex Holdings
Performance |
| Timeline |
| Mid Penn Bancorp |
| Veritex Holdings |
Mid Penn and Veritex Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Penn and Veritex Holdings
The main advantage of trading using opposite Mid Penn and Veritex Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Penn position performs unexpectedly, Veritex Holdings 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 Veritex Holdings will offset losses from the drop in Veritex Holdings' long position.| Mid Penn vs. Fifth Third Bancorp | Mid Penn vs. Zions Bancorporation | Mid Penn vs. Huntington Bancshares Incorporated | Mid Penn vs. Comerica |
| Veritex Holdings vs. Fifth Third Bancorp | Veritex Holdings vs. Zions Bancorporation | Veritex Holdings vs. Huntington Bancshares Incorporated | Veritex Holdings vs. Comerica |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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