Correlation Between United Security and Dow Jones
Can any of the company-specific risk be diversified away by investing in both United Security and Dow Jones 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 Security and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Security Bancshares and Dow Jones Industrial, you can compare the effects of market volatilities on United Security and Dow Jones 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 Security with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Security and Dow Jones.
Diversification Opportunities for United Security and Dow Jones
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and Dow is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding United Security Bancshares and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and United Security 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 Security Bancshares are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of United Security i.e., United Security and Dow Jones go up and down completely randomly.
Pair Corralation between United Security and Dow Jones
Given the investment horizon of 90 days United Security Bancshares is expected to generate 0.96 times more return on investment than Dow Jones. However, United Security Bancshares is 1.04 times less risky than Dow Jones. It trades about 0.73 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.38 per unit of risk. If you would invest 862.00 in United Security Bancshares on September 3, 2024 and sell it today you would earn a total of 121.00 from holding United Security Bancshares or generate 14.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Security Bancshares vs. Dow Jones Industrial
Performance |
| Timeline |
United Security and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
United Security Bancshares
Pair trading matchups for United Security
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with United Security and Dow Jones
The main advantage of trading using opposite United Security and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Security position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| United Security vs. Home Federal Bancorp | United Security vs. Lake Shore Bancorp | United Security vs. Community West Bancshares | United Security vs. First Northwest Bancorp |
| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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