Correlation Between Pekin Life and Virginia National
Can any of the company-specific risk be diversified away by investing in both Pekin Life and Virginia National 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 Pekin Life and Virginia National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pekin Life Insurance and Virginia National Bankshares, you can compare the effects of market volatilities on Pekin Life and Virginia National 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 Pekin Life with a short position of Virginia National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pekin Life and Virginia National.
Diversification Opportunities for Pekin Life and Virginia National
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pekin and Virginia is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Pekin Life Insurance and Virginia National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virginia National and Pekin Life 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 Pekin Life Insurance are associated (or correlated) with Virginia National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virginia National has no effect on the direction of Pekin Life i.e., Pekin Life and Virginia National go up and down completely randomly.
Pair Corralation between Pekin Life and Virginia National
Given the investment horizon of 90 days Pekin Life is expected to generate 17.63 times less return on investment than Virginia National. But when comparing it to its historical volatility, Pekin Life Insurance is 5.06 times less risky than Virginia National. It trades about 0.01 of its potential returns per unit of risk. Virginia National Bankshares is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,888 in Virginia National Bankshares on September 1, 2024 and sell it today you would earn a total of 1,194 from holding Virginia National Bankshares or generate 41.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pekin Life Insurance vs. Virginia National Bankshares
Performance |
| Timeline |
| Pekin Life Insurance |
| Virginia National |
Pekin Life and Virginia National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pekin Life and Virginia National
The main advantage of trading using opposite Pekin Life and Virginia National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pekin Life position performs unexpectedly, Virginia National 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 Virginia National will offset losses from the drop in Virginia National's long position.| Pekin Life vs. HUMANA INC | Pekin Life vs. SCOR PK | Pekin Life vs. Aquagold International | Pekin Life vs. Thrivent High Yield |
| Virginia National vs. Finward Bancorp | Virginia National vs. Community West Bancshares | Virginia National vs. First Financial Northwest | Virginia National vs. Oak Valley 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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