Correlation Between Univest Pennsylvania and Washington Trust
Can any of the company-specific risk be diversified away by investing in both Univest Pennsylvania and Washington Trust 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 Univest Pennsylvania and Washington Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Univest Pennsylvania and Washington Trust Bancorp, you can compare the effects of market volatilities on Univest Pennsylvania and Washington Trust 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 Univest Pennsylvania with a short position of Washington Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Univest Pennsylvania and Washington Trust.
Diversification Opportunities for Univest Pennsylvania and Washington Trust
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Univest and Washington is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Univest Pennsylvania and Washington Trust Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Trust Bancorp and Univest Pennsylvania 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 Univest Pennsylvania are associated (or correlated) with Washington Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Trust Bancorp has no effect on the direction of Univest Pennsylvania i.e., Univest Pennsylvania and Washington Trust go up and down completely randomly.
Pair Corralation between Univest Pennsylvania and Washington Trust
Given the investment horizon of 90 days Univest Pennsylvania is expected to generate 1.08 times less return on investment than Washington Trust. But when comparing it to its historical volatility, Univest Pennsylvania is 1.21 times less risky than Washington Trust. It trades about 0.14 of its potential returns per unit of risk. Washington Trust Bancorp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,506 in Washington Trust Bancorp on August 24, 2024 and sell it today you would earn a total of 1,154 from holding Washington Trust Bancorp or generate 46.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Univest Pennsylvania vs. Washington Trust Bancorp
Performance |
| Timeline |
| Univest Pennsylvania |
| Washington Trust Bancorp |
Univest Pennsylvania and Washington Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Univest Pennsylvania and Washington Trust
The main advantage of trading using opposite Univest Pennsylvania and Washington Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Univest Pennsylvania position performs unexpectedly, Washington Trust 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 Washington Trust will offset losses from the drop in Washington Trust's long position.| Univest Pennsylvania vs. Waterstone Financial | Univest Pennsylvania vs. Mid Penn Bancorp | Univest Pennsylvania vs. ST Bancorp | Univest Pennsylvania vs. Republic Bancorp |
| Washington Trust vs. Univest Pennsylvania | Washington Trust vs. Waterstone Financial | Washington Trust vs. Mid Penn Bancorp | Washington Trust vs. ST 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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