Correlation Between Uwharrie Capital and Eastern Michigan
Can any of the company-specific risk be diversified away by investing in both Uwharrie Capital and Eastern Michigan 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 Uwharrie Capital and Eastern Michigan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uwharrie Capital Corp and Eastern Michigan Financial, you can compare the effects of market volatilities on Uwharrie Capital and Eastern Michigan 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 Uwharrie Capital with a short position of Eastern Michigan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uwharrie Capital and Eastern Michigan.
Diversification Opportunities for Uwharrie Capital and Eastern Michigan
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Uwharrie and Eastern is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Uwharrie Capital Corp and Eastern Michigan Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Michigan Fin and Uwharrie Capital 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 Uwharrie Capital Corp are associated (or correlated) with Eastern Michigan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Michigan Fin has no effect on the direction of Uwharrie Capital i.e., Uwharrie Capital and Eastern Michigan go up and down completely randomly.
Pair Corralation between Uwharrie Capital and Eastern Michigan
Given the investment horizon of 90 days Uwharrie Capital Corp is expected to generate 0.98 times more return on investment than Eastern Michigan. However, Uwharrie Capital Corp is 1.02 times less risky than Eastern Michigan. It trades about -0.01 of its potential returns per unit of risk. Eastern Michigan Financial is currently generating about -0.06 per unit of risk. If you would invest 844.00 in Uwharrie Capital Corp on September 3, 2024 and sell it today you would lose (4.00) from holding Uwharrie Capital Corp or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uwharrie Capital Corp vs. Eastern Michigan Financial
Performance |
| Timeline |
| Uwharrie Capital Corp |
| Eastern Michigan Fin |
Uwharrie Capital and Eastern Michigan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uwharrie Capital and Eastern Michigan
The main advantage of trading using opposite Uwharrie Capital and Eastern Michigan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uwharrie Capital position performs unexpectedly, Eastern Michigan 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 Eastern Michigan will offset losses from the drop in Eastern Michigan's long position.| Uwharrie Capital vs. ENB Financial Corp | Uwharrie Capital vs. First Reliance Bancshares | Uwharrie Capital vs. Oak Ridge Financial | Uwharrie Capital vs. Glen Burnie Bancorp |
| Eastern Michigan vs. Commercial National Financial | Eastern Michigan vs. Mifflinburg Bancorp | Eastern Michigan vs. Apollo Bancorp | Eastern Michigan vs. Community Bankers |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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