Correlation Between United Bancorp and United Bankshares
Can any of the company-specific risk be diversified away by investing in both United Bancorp and United Bankshares 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 United Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Bancorp and United Bankshares, you can compare the effects of market volatilities on United Bancorp and United Bankshares 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 United Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bancorp and United Bankshares.
Diversification Opportunities for United Bancorp and United Bankshares
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and United is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding United Bancorp and United Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bankshares 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 United Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bankshares has no effect on the direction of United Bancorp i.e., United Bancorp and United Bankshares go up and down completely randomly.
Pair Corralation between United Bancorp and United Bankshares
Given the investment horizon of 90 days United Bancorp is expected to under-perform the United Bankshares. In addition to that, United Bancorp is 1.93 times more volatile than United Bankshares. It trades about -0.02 of its total potential returns per unit of risk. United Bankshares is currently generating about 0.08 per unit of volatility. If you would invest 3,764 in United Bankshares on October 29, 2024 and sell it today you would earn a total of 76.00 from holding United Bankshares or generate 2.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
United Bancorp vs. United Bankshares
Performance |
| Timeline |
| United Bancorp |
| United Bankshares |
United Bancorp and United Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Bancorp and United Bankshares
The main advantage of trading using opposite United Bancorp and United Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bancorp position performs unexpectedly, United Bankshares 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 Bankshares will offset losses from the drop in United Bankshares' long position.| United Bancorp vs. Rhinebeck Bancorp | United Bancorp vs. Shore Bancshares | United Bancorp vs. First Northwest Bancorp | United Bancorp vs. Community West Bancshares |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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