Correlation Between NYSE Composite and United Bankshares
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and United 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 NYSE Composite and United Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and United Bankshares, you can compare the effects of market volatilities on NYSE Composite and United 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 NYSE Composite with a short position of United Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and United Bankshares.
Diversification Opportunities for NYSE Composite and United Bankshares
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and United is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and United Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bankshares and NYSE Composite 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 NYSE Composite are associated (or correlated) with United Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bankshares has no effect on the direction of NYSE Composite i.e., NYSE Composite and United Bankshares go up and down completely randomly.
Pair Corralation between NYSE Composite and United Bankshares
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.35 times more return on investment than United Bankshares. However, NYSE Composite is 2.87 times less risky than United Bankshares. It trades about 0.08 of its potential returns per unit of risk. United Bankshares is currently generating about 0.02 per unit of risk. If you would invest 1,589,536 in NYSE Composite on August 27, 2024 and sell it today you would earn a total of 422,809 from holding NYSE Composite or generate 26.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. United Bankshares
Performance |
| Timeline |
NYSE Composite and United Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
United Bankshares
Pair trading matchups for United Bankshares
Pair Trading with NYSE Composite and United Bankshares
The main advantage of trading using opposite NYSE Composite and United Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, United 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 United Bankshares will offset losses from the drop in United Bankshares' long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| United Bankshares vs. Peoples Bancorp | United Bankshares vs. Eagle Bancorp | United Bankshares vs. Northrim BanCorp | United Bankshares vs. Pacific Premier 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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