Correlation Between United Bankshares and Heritage Commerce
Can any of the company-specific risk be diversified away by investing in both United Bankshares and Heritage Commerce 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 Heritage Commerce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Bankshares and Heritage Commerce Corp, you can compare the effects of market volatilities on United Bankshares and Heritage Commerce 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 Heritage Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bankshares and Heritage Commerce.
Diversification Opportunities for United Bankshares and Heritage Commerce
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and Heritage is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding United Bankshares and Heritage Commerce Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Commerce Corp 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 Heritage Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Commerce Corp has no effect on the direction of United Bankshares i.e., United Bankshares and Heritage Commerce go up and down completely randomly.
Pair Corralation between United Bankshares and Heritage Commerce
Given the investment horizon of 90 days United Bankshares is expected to generate 1.1 times less return on investment than Heritage Commerce. But when comparing it to its historical volatility, United Bankshares is 1.08 times less risky than Heritage Commerce. It trades about 0.15 of its potential returns per unit of risk. Heritage Commerce Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 923.00 in Heritage Commerce Corp on November 2, 2024 and sell it today you would earn a total of 39.00 from holding Heritage Commerce Corp or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Bankshares vs. Heritage Commerce Corp
Performance |
| Timeline |
| United Bankshares |
| Heritage Commerce Corp |
United Bankshares and Heritage Commerce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Bankshares and Heritage Commerce
The main advantage of trading using opposite United Bankshares and Heritage Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bankshares position performs unexpectedly, Heritage Commerce 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 Heritage Commerce will offset losses from the drop in Heritage Commerce's long position.| United Bankshares vs. Peoples Bancorp | United Bankshares vs. Eagle Bancorp | United Bankshares vs. Northrim BanCorp | United Bankshares vs. Pacific Premier Bancorp |
| Heritage Commerce vs. Home Federal Bancorp | Heritage Commerce vs. First Financial Northwest | Heritage Commerce vs. First Northwest Bancorp | Heritage Commerce vs. First Capital |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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