Correlation Between United Community and ST Bancorp

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Can any of the company-specific risk be diversified away by investing in both United Community and ST 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 Community and ST Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Community Banks and ST Bancorp, you can compare the effects of market volatilities on United Community and ST 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 Community with a short position of ST Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Community and ST Bancorp.

Diversification Opportunities for United Community and ST Bancorp

-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between United and STBA is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding United Community Banks and ST Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ST Bancorp and United Community 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 Community Banks are associated (or correlated) with ST Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ST Bancorp has no effect on the direction of United Community i.e., United Community and ST Bancorp go up and down completely randomly.

Pair Corralation between United Community and ST Bancorp

If you would invest  3,823  in ST Bancorp on August 31, 2024 and sell it today you would earn a total of  514.00  from holding ST Bancorp or generate 13.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

United Community Banks  vs.  ST Bancorp

 Performance 
       Timeline  
United Community Banks 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days United Community Banks has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, United Community is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.
ST Bancorp 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in ST Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, ST Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

United Community and ST Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Community and ST Bancorp

The main advantage of trading using opposite United Community and ST Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Community position performs unexpectedly, ST 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 ST Bancorp will offset losses from the drop in ST Bancorp's long position.
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The idea behind United Community Banks and ST Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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