Correlation Between United Tennessee and United Bancorporation
Can any of the company-specific risk be diversified away by investing in both United Tennessee and United Bancorporation 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 Tennessee and United Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Tennessee Bankshares and United Bancorporation of, you can compare the effects of market volatilities on United Tennessee and United Bancorporation 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 Tennessee with a short position of United Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Tennessee and United Bancorporation.
Diversification Opportunities for United Tennessee and United Bancorporation
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and United is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding United Tennessee Bankshares and United Bancorp. of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bancorporation and United Tennessee 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 Tennessee Bankshares are associated (or correlated) with United Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bancorporation has no effect on the direction of United Tennessee i.e., United Tennessee and United Bancorporation go up and down completely randomly.
Pair Corralation between United Tennessee and United Bancorporation
Given the investment horizon of 90 days United Tennessee Bankshares is expected to under-perform the United Bancorporation. In addition to that, United Tennessee is 1.34 times more volatile than United Bancorporation of. It trades about 0.0 of its total potential returns per unit of risk. United Bancorporation of is currently generating about 0.07 per unit of volatility. If you would invest 3,392 in United Bancorporation of on August 25, 2024 and sell it today you would earn a total of 2,508 from holding United Bancorporation of or generate 73.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 32.51% |
| Values | Daily Returns |
United Tennessee Bankshares vs. United Bancorp. of
Performance |
| Timeline |
| United Tennessee Ban |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| United Bancorporation |
United Tennessee and United Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Tennessee and United Bancorporation
The main advantage of trading using opposite United Tennessee and United Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Tennessee position performs unexpectedly, United Bancorporation 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 Bancorporation will offset losses from the drop in United Bancorporation's long position.The idea behind United Tennessee Bankshares and United Bancorporation of 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.| United Bancorporation vs. Invesco High Income | United Bancorporation vs. Blackrock Muniholdings Ny | United Bancorporation vs. MFS Investment Grade | United Bancorporation vs. Federated Premier Municipal |
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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