Correlation Between Virginia National and Bank of Marin
Can any of the company-specific risk be diversified away by investing in both Virginia National and Bank of Marin 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 Virginia National and Bank of Marin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virginia National Bankshares and Bank of Marin, you can compare the effects of market volatilities on Virginia National and Bank of Marin 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 Virginia National with a short position of Bank of Marin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and Bank of Marin.
Diversification Opportunities for Virginia National and Bank of Marin
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Virginia and Bank is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and Bank of Marin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Marin and Virginia National 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 Virginia National Bankshares are associated (or correlated) with Bank of Marin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Marin has no effect on the direction of Virginia National i.e., Virginia National and Bank of Marin go up and down completely randomly.
Pair Corralation between Virginia National and Bank of Marin
Given the investment horizon of 90 days Virginia National Bankshares is expected to under-perform the Bank of Marin. In addition to that, Virginia National is 1.11 times more volatile than Bank of Marin. It trades about -0.1 of its total potential returns per unit of risk. Bank of Marin is currently generating about 0.14 per unit of volatility. If you would invest 2,377 in Bank of Marin on November 1, 2024 and sell it today you would earn a total of 122.00 from holding Bank of Marin or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Virginia National Bankshares vs. Bank of Marin
Performance |
| Timeline |
| Virginia National |
| Bank of Marin |
Virginia National and Bank of Marin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virginia National and Bank of Marin
The main advantage of trading using opposite Virginia National and Bank of Marin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia National position performs unexpectedly, Bank of Marin 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 Bank of Marin will offset losses from the drop in Bank of Marin's long position.| Virginia National vs. Finward Bancorp | Virginia National vs. Community West Bancshares | Virginia National vs. First Financial Northwest | Virginia National vs. Oak Valley Bancorp |
| Bank of Marin vs. Community West Bancshares | Bank of Marin vs. Heritage Financial | Bank of Marin vs. First Financial Northwest | Bank of Marin vs. Sierra 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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