Correlation Between Prosperity Bancshares and MVB Financial
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares and MVB 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 Prosperity Bancshares and MVB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and MVB Financial Corp, you can compare the effects of market volatilities on Prosperity Bancshares and MVB 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 Prosperity Bancshares with a short position of MVB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and MVB Financial.
Diversification Opportunities for Prosperity Bancshares and MVB Financial
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prosperity and MVB is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and MVB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MVB Financial Corp and Prosperity Bancshares 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 Prosperity Bancshares are associated (or correlated) with MVB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MVB Financial Corp has no effect on the direction of Prosperity Bancshares i.e., Prosperity Bancshares and MVB Financial go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and MVB Financial
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to under-perform the MVB Financial. But the stock apears to be less risky and, when comparing its historical volatility, Prosperity Bancshares is 1.58 times less risky than MVB Financial. The stock trades about -0.19 of its potential returns per unit of risk. The MVB Financial Corp is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 1,985 in MVB Financial Corp on November 27, 2024 and sell it today you would lose (60.00) from holding MVB Financial Corp or give up 3.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosperity Bancshares vs. MVB Financial Corp
Performance |
| Timeline |
| Prosperity Bancshares |
| MVB Financial Corp |
Prosperity Bancshares and MVB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and MVB Financial
The main advantage of trading using opposite Prosperity Bancshares and MVB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares position performs unexpectedly, MVB 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 MVB Financial will offset losses from the drop in MVB Financial's long position.| Prosperity Bancshares vs. Heritage Commerce Corp | Prosperity Bancshares vs. Business First Bancshares | Prosperity Bancshares vs. German American Bancorp | Prosperity Bancshares vs. Texas Capital Bancshares |
| MVB Financial vs. Community West Bancshares | MVB Financial vs. First Financial Northwest | MVB Financial vs. CF Bankshares | MVB Financial vs. Home Federal 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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