Correlation Between United Security and TriCo Bancshares
Can any of the company-specific risk be diversified away by investing in both United Security and TriCo Bancshares 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 TriCo Bancshares 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 TriCo Bancshares, you can compare the effects of market volatilities on United Security and TriCo Bancshares 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 TriCo Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Security and TriCo Bancshares.
Diversification Opportunities for United Security and TriCo Bancshares
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and TriCo is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding United Security Bancshares and TriCo Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TriCo Bancshares 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 TriCo Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TriCo Bancshares has no effect on the direction of United Security i.e., United Security and TriCo Bancshares go up and down completely randomly.
Pair Corralation between United Security and TriCo Bancshares
Given the investment horizon of 90 days United Security is expected to generate 1.08 times less return on investment than TriCo Bancshares. But when comparing it to its historical volatility, United Security Bancshares is 3.18 times less risky than TriCo Bancshares. It trades about 0.35 of its potential returns per unit of risk. TriCo Bancshares is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,367 in TriCo Bancshares on August 24, 2024 and sell it today you would earn a total of 376.00 from holding TriCo Bancshares or generate 8.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Security Bancshares vs. TriCo Bancshares
Performance |
| Timeline |
| United Security Banc |
| TriCo Bancshares |
United Security and TriCo Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Security and TriCo Bancshares
The main advantage of trading using opposite United Security and TriCo Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Security position performs unexpectedly, TriCo Bancshares 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 TriCo Bancshares will offset losses from the drop in TriCo Bancshares' 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 |
| TriCo Bancshares vs. First Northwest Bancorp | TriCo Bancshares vs. Community West Bancshares | TriCo Bancshares vs. First Financial Northwest | TriCo Bancshares vs. Great Southern 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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