Correlation Between United Bankshares and Peoples Bancorp
Can any of the company-specific risk be diversified away by investing in both United Bankshares and Peoples Bancorp 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 Peoples Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Bankshares and Peoples Bancorp, you can compare the effects of market volatilities on United Bankshares and Peoples Bancorp 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 Peoples Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bankshares and Peoples Bancorp.
Diversification Opportunities for United Bankshares and Peoples Bancorp
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between United and Peoples is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding United Bankshares and Peoples Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Bancorp 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 Peoples Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Bancorp has no effect on the direction of United Bankshares i.e., United Bankshares and Peoples Bancorp go up and down completely randomly.
Pair Corralation between United Bankshares and Peoples Bancorp
Given the investment horizon of 90 days United Bankshares is expected to generate 0.95 times more return on investment than Peoples Bancorp. However, United Bankshares is 1.05 times less risky than Peoples Bancorp. It trades about 0.12 of its potential returns per unit of risk. Peoples Bancorp is currently generating about 0.09 per unit of risk. If you would invest 3,143 in United Bankshares on August 24, 2024 and sell it today you would earn a total of 1,031 from holding United Bankshares or generate 32.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
United Bankshares vs. Peoples Bancorp
Performance |
| Timeline |
| United Bankshares |
| Peoples Bancorp |
United Bankshares and Peoples Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Bankshares and Peoples Bancorp
The main advantage of trading using opposite United Bankshares and Peoples Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bankshares position performs unexpectedly, Peoples Bancorp 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 Peoples Bancorp will offset losses from the drop in Peoples Bancorp's long position.| United Bankshares vs. Peoples Bancorp | United Bankshares vs. Eagle Bancorp | United Bankshares vs. Northrim BanCorp | United Bankshares vs. Pacific Premier Bancorp |
| Peoples Bancorp vs. Eagle Bancorp | Peoples Bancorp vs. Northrim BanCorp | Peoples Bancorp vs. United Bankshares | Peoples Bancorp vs. Pacific Premier 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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