Correlation Between Unity Bancorp and Union Bankshares
Can any of the company-specific risk be diversified away by investing in both Unity Bancorp and Union Bankshares 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 Unity Bancorp and Union Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unity Bancorp and Union Bankshares, you can compare the effects of market volatilities on Unity Bancorp and Union Bankshares 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 Unity Bancorp with a short position of Union Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unity Bancorp and Union Bankshares.
Diversification Opportunities for Unity Bancorp and Union Bankshares
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Unity and Union is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Unity Bancorp and Union Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bankshares and Unity Bancorp 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 Unity Bancorp are associated (or correlated) with Union Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Bankshares has no effect on the direction of Unity Bancorp i.e., Unity Bancorp and Union Bankshares go up and down completely randomly.
Pair Corralation between Unity Bancorp and Union Bankshares
Given the investment horizon of 90 days Unity Bancorp is expected to generate 0.89 times more return on investment than Union Bankshares. However, Unity Bancorp is 1.12 times less risky than Union Bankshares. It trades about 0.06 of its potential returns per unit of risk. Union Bankshares is currently generating about 0.04 per unit of risk. If you would invest 2,706 in Unity Bancorp on August 24, 2024 and sell it today you would earn a total of 1,955 from holding Unity Bancorp or generate 72.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unity Bancorp vs. Union Bankshares
Performance |
| Timeline |
| Unity Bancorp |
| Union Bankshares |
Unity Bancorp and Union Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unity Bancorp and Union Bankshares
The main advantage of trading using opposite Unity Bancorp and Union Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unity Bancorp position performs unexpectedly, Union Bankshares 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 Union Bankshares will offset losses from the drop in Union Bankshares' long position.| Unity Bancorp vs. Affinity Bancshares | Unity Bancorp vs. Home Federal Bancorp | Unity Bancorp vs. Stellar Bancorp, | Unity Bancorp vs. Meridian Bank |
| Union Bankshares vs. Home Bancorp | Union Bankshares vs. Rhinebeck Bancorp | Union Bankshares vs. LINKBANCORP | Union Bankshares vs. Magyar Bancorp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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