Correlation Between Two Rivers and United Overseas
Can any of the company-specific risk be diversified away by investing in both Two Rivers and United Overseas 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 Two Rivers and United Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Two Rivers Financial and United Overseas Bank, you can compare the effects of market volatilities on Two Rivers and United Overseas 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 Two Rivers with a short position of United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Two Rivers and United Overseas.
Diversification Opportunities for Two Rivers and United Overseas
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Two and United is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Two Rivers Financial and United Overseas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Overseas Bank and Two Rivers 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 Two Rivers Financial are associated (or correlated) with United Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Overseas Bank has no effect on the direction of Two Rivers i.e., Two Rivers and United Overseas go up and down completely randomly.
Pair Corralation between Two Rivers and United Overseas
Given the investment horizon of 90 days Two Rivers Financial is expected to generate 0.61 times more return on investment than United Overseas. However, Two Rivers Financial is 1.64 times less risky than United Overseas. It trades about 0.55 of its potential returns per unit of risk. United Overseas Bank is currently generating about 0.27 per unit of risk. If you would invest 2,990 in Two Rivers Financial on August 30, 2024 and sell it today you would earn a total of 410.00 from holding Two Rivers Financial or generate 13.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Two Rivers Financial vs. United Overseas Bank
Performance |
| Timeline |
| Two Rivers Financial |
| United Overseas Bank |
Two Rivers and United Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Two Rivers and United Overseas
The main advantage of trading using opposite Two Rivers and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Two Rivers position performs unexpectedly, United Overseas 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 Overseas will offset losses from the drop in United Overseas' long position.| Two Rivers vs. First Capital | Two Rivers vs. Civista Bancshares | Two Rivers vs. Finward Bancorp | Two Rivers vs. Heritage Financial |
| United Overseas vs. KBC Groep NV | United Overseas vs. DBS Group Holdings | United Overseas vs. HomeStreet | United Overseas vs. Bank of Hawaii |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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