Correlation Between United Bankshares and Parke Bancorp
Can any of the company-specific risk be diversified away by investing in both United Bankshares and Parke 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 Parke 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 Parke Bancorp, you can compare the effects of market volatilities on United Bankshares and Parke 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 Parke Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bankshares and Parke Bancorp.
Diversification Opportunities for United Bankshares and Parke Bancorp
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Parke is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding United Bankshares and Parke Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parke 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 Parke Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parke Bancorp has no effect on the direction of United Bankshares i.e., United Bankshares and Parke Bancorp go up and down completely randomly.
Pair Corralation between United Bankshares and Parke Bancorp
Given the investment horizon of 90 days United Bankshares is expected to generate 1.51 times less return on investment than Parke Bancorp. But when comparing it to its historical volatility, United Bankshares is 1.05 times less risky than Parke Bancorp. It trades about 0.02 of its potential returns per unit of risk. Parke Bancorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,915 in Parke Bancorp on August 24, 2024 and sell it today you would earn a total of 388.00 from holding Parke Bancorp or generate 20.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
United Bankshares vs. Parke Bancorp
Performance |
| Timeline |
| United Bankshares |
| Parke Bancorp |
United Bankshares and Parke Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Bankshares and Parke Bancorp
The main advantage of trading using opposite United Bankshares and Parke Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bankshares position performs unexpectedly, Parke 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 Parke Bancorp will offset losses from the drop in Parke 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 |
| Parke Bancorp vs. Sound Financial Bancorp | Parke Bancorp vs. Finward Bancorp | Parke Bancorp vs. Franklin Financial Services | Parke Bancorp vs. Community West 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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