Correlation Between United Overseas and Grand River
Can any of the company-specific risk be diversified away by investing in both United Overseas and Grand River 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 Grand River 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 Grand River Commerce, you can compare the effects of market volatilities on United Overseas and Grand River 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 Grand River. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Overseas and Grand River.
Diversification Opportunities for United Overseas and Grand River
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Grand is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding United Overseas Bank and Grand River Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand River Commerce 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 Grand River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand River Commerce has no effect on the direction of United Overseas i.e., United Overseas and Grand River go up and down completely randomly.
Pair Corralation between United Overseas and Grand River
Assuming the 90 days horizon United Overseas Bank is expected to generate 0.46 times more return on investment than Grand River. However, United Overseas Bank is 2.16 times less risky than Grand River. It trades about 0.14 of its potential returns per unit of risk. Grand River Commerce is currently generating about -0.01 per unit of risk. If you would invest 3,848 in United Overseas Bank on August 29, 2024 and sell it today you would earn a total of 1,535 from holding United Overseas Bank or generate 39.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
United Overseas Bank vs. Grand River Commerce
Performance |
| Timeline |
| United Overseas Bank |
| Grand River Commerce |
United Overseas and Grand River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Overseas and Grand River
The main advantage of trading using opposite United Overseas and Grand River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Overseas position performs unexpectedly, Grand River 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 Grand River will offset losses from the drop in Grand River's long position.| United Overseas vs. KBC Groep NV | United Overseas vs. DBS Group Holdings | United Overseas vs. HomeStreet | United Overseas vs. Bank of Hawaii |
| Grand River vs. FS Bancorp | Grand River vs. Eastern Michigan Financial | Grand River vs. Bank of Botetourt | Grand River vs. FNB Inc |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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