Correlation Between MVB Financial and Heritage Financial
Can any of the company-specific risk be diversified away by investing in both MVB Financial and Heritage Financial 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 MVB Financial and Heritage Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MVB Financial Corp and Heritage Financial, you can compare the effects of market volatilities on MVB Financial and Heritage Financial 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 MVB Financial with a short position of Heritage Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MVB Financial and Heritage Financial.
Diversification Opportunities for MVB Financial and Heritage Financial
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MVB and Heritage is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding MVB Financial Corp and Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Financial and MVB Financial 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 MVB Financial Corp are associated (or correlated) with Heritage Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Financial has no effect on the direction of MVB Financial i.e., MVB Financial and Heritage Financial go up and down completely randomly.
Pair Corralation between MVB Financial and Heritage Financial
Given the investment horizon of 90 days MVB Financial Corp is expected to generate 1.29 times more return on investment than Heritage Financial. However, MVB Financial is 1.29 times more volatile than Heritage Financial. It trades about 0.16 of its potential returns per unit of risk. Heritage Financial is currently generating about 0.19 per unit of risk. If you would invest 1,874 in MVB Financial Corp on September 4, 2024 and sell it today you would earn a total of 285.00 from holding MVB Financial Corp or generate 15.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MVB Financial Corp vs. Heritage Financial
Performance |
| Timeline |
| MVB Financial Corp |
| Heritage Financial |
MVB Financial and Heritage Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MVB Financial and Heritage Financial
The main advantage of trading using opposite MVB Financial and Heritage Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MVB Financial position performs unexpectedly, Heritage Financial 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 Heritage Financial will offset losses from the drop in Heritage Financial's long position.| MVB Financial vs. Community West Bancshares | MVB Financial vs. First Financial Northwest | MVB Financial vs. CF Bankshares | MVB Financial vs. Home Federal Bancorp |
| Heritage Financial vs. Heritage Commerce Corp | Heritage Financial vs. Horizon Bancorp | Heritage Financial vs. Heartland Financial USA | Heritage Financial vs. Independent Bank |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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