Correlation Between United Overseas and Andover Bancorp
Can any of the company-specific risk be diversified away by investing in both United Overseas and Andover Bancorp 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 Overseas and Andover Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Overseas Bank and Andover Bancorp, you can compare the effects of market volatilities on United Overseas and Andover Bancorp 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 Overseas with a short position of Andover Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Overseas and Andover Bancorp.
Diversification Opportunities for United Overseas and Andover Bancorp
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and Andover is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding United Overseas Bank and Andover Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andover Bancorp and United Overseas 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 Overseas Bank are associated (or correlated) with Andover Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andover Bancorp has no effect on the direction of United Overseas i.e., United Overseas and Andover Bancorp go up and down completely randomly.
Pair Corralation between United Overseas and Andover Bancorp
Assuming the 90 days horizon United Overseas Bank is expected to generate 0.46 times more return on investment than Andover Bancorp. However, United Overseas Bank is 2.15 times less risky than Andover Bancorp. It trades about 0.31 of its potential returns per unit of risk. Andover Bancorp is currently generating about -0.21 per unit of risk. If you would invest 4,868 in United Overseas Bank on September 4, 2024 and sell it today you would earn a total of 577.00 from holding United Overseas Bank or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Overseas Bank vs. Andover Bancorp
Performance |
| Timeline |
| United Overseas Bank |
| Andover Bancorp |
United Overseas and Andover Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Overseas and Andover Bancorp
The main advantage of trading using opposite United Overseas and Andover Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Overseas position performs unexpectedly, Andover Bancorp 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 Andover Bancorp will offset losses from the drop in Andover Bancorp's long position.| United Overseas vs. Western Asset Global | United Overseas vs. Invesco Trust For | United Overseas vs. Logan Ridge Finance | United Overseas vs. Invesco Advantage MIT |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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