Correlation Between Union Bankshares and United Bancshares
Can any of the company-specific risk be diversified away by investing in both Union Bankshares and United 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 Union Bankshares and United Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Bankshares and United Bancshares, you can compare the effects of market volatilities on Union Bankshares and United 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 Union Bankshares with a short position of United Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Bankshares and United Bancshares.
Diversification Opportunities for Union Bankshares and United Bancshares
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Union and United is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Union Bankshares and United Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bancshares and Union 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 Union Bankshares are associated (or correlated) with United Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bancshares has no effect on the direction of Union Bankshares i.e., Union Bankshares and United Bancshares go up and down completely randomly.
Pair Corralation between Union Bankshares and United Bancshares
Considering the 90-day investment horizon Union Bankshares is expected to generate 2.59 times less return on investment than United Bancshares. In addition to that, Union Bankshares is 1.22 times more volatile than United Bancshares. It trades about 0.04 of its total potential returns per unit of risk. United Bancshares is currently generating about 0.13 per unit of volatility. If you would invest 1,837 in United Bancshares on August 24, 2024 and sell it today you would earn a total of 203.00 from holding United Bancshares or generate 11.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 9.07% |
| Values | Daily Returns |
Union Bankshares vs. United Bancshares
Performance |
| Timeline |
| Union Bankshares |
| United Bancshares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Union Bankshares and United Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Bankshares and United Bancshares
The main advantage of trading using opposite Union Bankshares and United Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Bankshares position performs unexpectedly, United 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 United Bancshares will offset losses from the drop in United Bancshares' long position.| Union Bankshares vs. Home Bancorp | Union Bankshares vs. Rhinebeck Bancorp | Union Bankshares vs. LINKBANCORP | Union Bankshares vs. Magyar Bancorp |
| United Bancshares vs. CCSB Financial Corp | United Bancshares vs. Delhi Bank Corp | United Bancshares vs. Bank of Utica | United Bancshares vs. First Community Financial |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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