Correlation Between Sea and Univest Pennsylvania
Can any of the company-specific risk be diversified away by investing in both Sea and Univest Pennsylvania 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 Sea and Univest Pennsylvania into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and Univest Pennsylvania, you can compare the effects of market volatilities on Sea and Univest Pennsylvania 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 Sea with a short position of Univest Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and Univest Pennsylvania.
Diversification Opportunities for Sea and Univest Pennsylvania
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sea and Univest is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Univest Pennsylvania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Univest Pennsylvania and Sea 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 Sea are associated (or correlated) with Univest Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Univest Pennsylvania has no effect on the direction of Sea i.e., Sea and Univest Pennsylvania go up and down completely randomly.
Pair Corralation between Sea and Univest Pennsylvania
Allowing for the 90-day total investment horizon Sea is expected to generate 1.6 times more return on investment than Univest Pennsylvania. However, Sea is 1.6 times more volatile than Univest Pennsylvania. It trades about 0.07 of its potential returns per unit of risk. Univest Pennsylvania is currently generating about 0.08 per unit of risk. If you would invest 6,338 in Sea on September 1, 2024 and sell it today you would earn a total of 5,042 from holding Sea or generate 79.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sea vs. Univest Pennsylvania
Performance |
| Timeline |
| Sea |
| Univest Pennsylvania |
Sea and Univest Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and Univest Pennsylvania
The main advantage of trading using opposite Sea and Univest Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, Univest Pennsylvania 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 Univest Pennsylvania will offset losses from the drop in Univest Pennsylvania's long position.The idea behind Sea and Univest Pennsylvania pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Univest Pennsylvania vs. Waterstone Financial | Univest Pennsylvania vs. Mid Penn Bancorp | Univest Pennsylvania vs. ST Bancorp | Univest Pennsylvania vs. Republic 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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