Correlation Between United Bankshares and Alpha Bank
Can any of the company-specific risk be diversified away by investing in both United Bankshares and Alpha Bank 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 Bankshares and Alpha Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Bankshares and Alpha Bank SA, you can compare the effects of market volatilities on United Bankshares and Alpha Bank 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 Bankshares with a short position of Alpha Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bankshares and Alpha Bank.
Diversification Opportunities for United Bankshares and Alpha Bank
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Alpha is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding United Bankshares and Alpha Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Bank SA and United Bankshares 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 Bankshares are associated (or correlated) with Alpha Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Bank SA has no effect on the direction of United Bankshares i.e., United Bankshares and Alpha Bank go up and down completely randomly.
Pair Corralation between United Bankshares and Alpha Bank
Given the investment horizon of 90 days United Bankshares is expected to generate 8.01 times less return on investment than Alpha Bank. But when comparing it to its historical volatility, United Bankshares is 2.03 times less risky than Alpha Bank. It trades about 0.01 of its potential returns per unit of risk. Alpha Bank SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Alpha Bank SA on October 14, 2024 and sell it today you would earn a total of 10.00 from holding Alpha Bank SA or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Bankshares vs. Alpha Bank SA
Performance |
| Timeline |
| United Bankshares |
| Alpha Bank SA |
United Bankshares and Alpha Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Bankshares and Alpha Bank
The main advantage of trading using opposite United Bankshares and Alpha Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bankshares position performs unexpectedly, Alpha Bank 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 Alpha Bank will offset losses from the drop in Alpha Bank's long position.| United Bankshares vs. Peoples Bancorp | United Bankshares vs. Eagle Bancorp | United Bankshares vs. Northrim BanCorp | United Bankshares vs. Pacific Premier Bancorp |
| Alpha Bank vs. National Bank of | Alpha Bank vs. Piraeus Bank SA | Alpha Bank vs. Eurobank Ergasias SA | Alpha Bank vs. First Citizens BancShares |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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