Correlation Between United Bancorp and Franklin Financial
Can any of the company-specific risk be diversified away by investing in both United Bancorp and Franklin 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 United Bancorp and Franklin Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Bancorp and Franklin Financial Services, you can compare the effects of market volatilities on United Bancorp and Franklin 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 United Bancorp with a short position of Franklin Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bancorp and Franklin Financial.
Diversification Opportunities for United Bancorp and Franklin Financial
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Franklin is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding United Bancorp and Franklin Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Financial and United Bancorp 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 United Bancorp are associated (or correlated) with Franklin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Financial has no effect on the direction of United Bancorp i.e., United Bancorp and Franklin Financial go up and down completely randomly.
Pair Corralation between United Bancorp and Franklin Financial
Given the investment horizon of 90 days United Bancorp is expected to generate 2.75 times more return on investment than Franklin Financial. However, United Bancorp is 2.75 times more volatile than Franklin Financial Services. It trades about -0.11 of its potential returns per unit of risk. Franklin Financial Services is currently generating about -0.76 per unit of risk. If you would invest 1,443 in United Bancorp on October 14, 2024 and sell it today you would lose (107.00) from holding United Bancorp or give up 7.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Bancorp vs. Franklin Financial Services
Performance |
| Timeline |
| United Bancorp |
| Franklin Financial |
United Bancorp and Franklin Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Bancorp and Franklin Financial
The main advantage of trading using opposite United Bancorp and Franklin Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bancorp position performs unexpectedly, Franklin 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 Franklin Financial will offset losses from the drop in Franklin Financial's long position.| United Bancorp vs. Rhinebeck Bancorp | United Bancorp vs. Shore Bancshares | United Bancorp vs. First Northwest Bancorp | United Bancorp vs. Community West Bancshares |
| Franklin Financial vs. Magyar Bancorp | Franklin Financial vs. Affinity Bancshares | Franklin Financial vs. Home Federal Bancorp | Franklin Financial vs. Sound Financial 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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