Correlation Between Union Bankshares and WesBanco
Can any of the company-specific risk be diversified away by investing in both Union Bankshares and WesBanco 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 WesBanco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Bankshares and WesBanco, you can compare the effects of market volatilities on Union Bankshares and WesBanco 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 WesBanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Bankshares and WesBanco.
Diversification Opportunities for Union Bankshares and WesBanco
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Union and WesBanco is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Union Bankshares and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco 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 WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of Union Bankshares i.e., Union Bankshares and WesBanco go up and down completely randomly.
Pair Corralation between Union Bankshares and WesBanco
Considering the 90-day investment horizon Union Bankshares is expected to generate 1.12 times more return on investment than WesBanco. However, Union Bankshares is 1.12 times more volatile than WesBanco. It trades about 0.08 of its potential returns per unit of risk. WesBanco is currently generating about 0.07 per unit of risk. If you would invest 1,913 in Union Bankshares on August 31, 2024 and sell it today you would earn a total of 1,559 from holding Union Bankshares or generate 81.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Bankshares vs. WesBanco
Performance |
| Timeline |
| Union Bankshares |
| WesBanco |
Union Bankshares and WesBanco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Bankshares and WesBanco
The main advantage of trading using opposite Union Bankshares and WesBanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Bankshares position performs unexpectedly, WesBanco 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 WesBanco will offset losses from the drop in WesBanco's long position.| Union Bankshares vs. Home Bancorp | Union Bankshares vs. Rhinebeck Bancorp | Union Bankshares vs. LINKBANCORP | Union Bankshares vs. Magyar Bancorp |
| WesBanco vs. Union Bankshares | WesBanco vs. Home Bancorp | WesBanco vs. Rhinebeck Bancorp | WesBanco vs. LINKBANCORP |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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