Correlation Between United Bancorp and Prime Meridian
Can any of the company-specific risk be diversified away by investing in both United Bancorp and Prime Meridian 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 Prime Meridian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Bancorp and Prime Meridian Holding, you can compare the effects of market volatilities on United Bancorp and Prime Meridian 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 Prime Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bancorp and Prime Meridian.
Diversification Opportunities for United Bancorp and Prime Meridian
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and Prime is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding United Bancorp and Prime Meridian Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Meridian Holding 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 Prime Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Meridian Holding has no effect on the direction of United Bancorp i.e., United Bancorp and Prime Meridian go up and down completely randomly.
Pair Corralation between United Bancorp and Prime Meridian
Given the investment horizon of 90 days United Bancorp is expected to generate 4.18 times less return on investment than Prime Meridian. In addition to that, United Bancorp is 2.43 times more volatile than Prime Meridian Holding. It trades about 0.01 of its total potential returns per unit of risk. Prime Meridian Holding is currently generating about 0.12 per unit of volatility. If you would invest 2,575 in Prime Meridian Holding on October 29, 2024 and sell it today you would earn a total of 225.00 from holding Prime Meridian Holding or generate 8.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.36% |
| Values | Daily Returns |
United Bancorp vs. Prime Meridian Holding
Performance |
| Timeline |
| United Bancorp |
| Prime Meridian Holding |
United Bancorp and Prime Meridian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Bancorp and Prime Meridian
The main advantage of trading using opposite United Bancorp and Prime Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bancorp position performs unexpectedly, Prime Meridian 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 Prime Meridian will offset losses from the drop in Prime Meridian'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 |
| Prime Meridian vs. Village Bank and | Prime Meridian vs. William Penn Bancorp | Prime Meridian vs. Pathfinder 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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