Correlation Between UMB Financial and Affinity Bancshares
Can any of the company-specific risk be diversified away by investing in both UMB Financial and Affinity Bancshares 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 UMB Financial and Affinity Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UMB Financial and Affinity Bancshares, you can compare the effects of market volatilities on UMB Financial and Affinity Bancshares 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 UMB Financial with a short position of Affinity Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMB Financial and Affinity Bancshares.
Diversification Opportunities for UMB Financial and Affinity Bancshares
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between UMB and Affinity is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding UMB Financial and Affinity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity Bancshares and UMB Financial 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 UMB Financial are associated (or correlated) with Affinity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity Bancshares has no effect on the direction of UMB Financial i.e., UMB Financial and Affinity Bancshares go up and down completely randomly.
Pair Corralation between UMB Financial and Affinity Bancshares
Given the investment horizon of 90 days UMB Financial is expected to generate 4.25 times more return on investment than Affinity Bancshares. However, UMB Financial is 4.25 times more volatile than Affinity Bancshares. It trades about 0.21 of its potential returns per unit of risk. Affinity Bancshares is currently generating about 0.04 per unit of risk. If you would invest 10,660 in UMB Financial on August 24, 2024 and sell it today you would earn a total of 1,653 from holding UMB Financial or generate 15.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UMB Financial vs. Affinity Bancshares
Performance |
| Timeline |
| UMB Financial |
| Affinity Bancshares |
UMB Financial and Affinity Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UMB Financial and Affinity Bancshares
The main advantage of trading using opposite UMB Financial and Affinity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UMB Financial position performs unexpectedly, Affinity Bancshares 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 Affinity Bancshares will offset losses from the drop in Affinity Bancshares' long position.| UMB Financial vs. BOK Financial | UMB Financial vs. Community Bank System | UMB Financial vs. First Financial Bankshares | UMB Financial vs. Equity Bancshares, |
| Affinity Bancshares vs. Home Federal Bancorp | Affinity Bancshares vs. Magyar Bancorp | Affinity Bancshares 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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