Correlation Between Security Federal and United Bancorporation
Can any of the company-specific risk be diversified away by investing in both Security Federal and United Bancorporation 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 Security Federal and United Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Security Federal and United Bancorporation of, you can compare the effects of market volatilities on Security Federal and United Bancorporation 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 Security Federal with a short position of United Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Security Federal and United Bancorporation.
Diversification Opportunities for Security Federal and United Bancorporation
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Security and United is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Security Federal and United Bancorp. of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bancorporation and Security Federal 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 Security Federal are associated (or correlated) with United Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bancorporation has no effect on the direction of Security Federal i.e., Security Federal and United Bancorporation go up and down completely randomly.
Pair Corralation between Security Federal and United Bancorporation
Given the investment horizon of 90 days Security Federal is expected to generate 1.95 times less return on investment than United Bancorporation. In addition to that, Security Federal is 1.36 times more volatile than United Bancorporation of. It trades about 0.02 of its total potential returns per unit of risk. United Bancorporation of is currently generating about 0.05 per unit of volatility. If you would invest 3,859 in United Bancorporation of on November 2, 2024 and sell it today you would earn a total of 1,816 from holding United Bancorporation of or generate 47.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 74.17% |
| Values | Daily Returns |
Security Federal vs. United Bancorp. of
Performance |
| Timeline |
| Security Federal |
| United Bancorporation |
Security Federal and United Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Security Federal and United Bancorporation
The main advantage of trading using opposite Security Federal and United Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Security Federal position performs unexpectedly, United Bancorporation 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 Bancorporation will offset losses from the drop in United Bancorporation's long position.| Security Federal vs. MF Bancorp | Security Federal vs. Merchants Marine Bancorp | Security Federal vs. MNB Holdings Corp | Security Federal vs. United Bancorporation of |
| United Bancorporation vs. MF Bancorp | United Bancorporation vs. Merchants Marine Bancorp | United Bancorporation vs. MNB Holdings Corp | United Bancorporation vs. Security Federal |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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