Correlation Between Virginia National and Carter Bank
Can any of the company-specific risk be diversified away by investing in both Virginia National and Carter Bank 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 Carter Bank 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 Carter Bank and, you can compare the effects of market volatilities on Virginia National and Carter Bank 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 Carter Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and Carter Bank.
Diversification Opportunities for Virginia National and Carter Bank
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virginia and Carter is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and Carter Bank and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carter Bank 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 Carter Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carter Bank has no effect on the direction of Virginia National i.e., Virginia National and Carter Bank go up and down completely randomly.
Pair Corralation between Virginia National and Carter Bank
Given the investment horizon of 90 days Virginia National Bankshares is expected to generate 0.59 times more return on investment than Carter Bank. However, Virginia National Bankshares is 1.71 times less risky than Carter Bank. It trades about 0.13 of its potential returns per unit of risk. Carter Bank and is currently generating about 0.03 per unit of risk. If you would invest 3,995 in Virginia National Bankshares on August 30, 2024 and sell it today you would earn a total of 195.00 from holding Virginia National Bankshares or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virginia National Bankshares vs. Carter Bank and
Performance |
| Timeline |
| Virginia National |
| Carter Bank |
Virginia National and Carter Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virginia National and Carter Bank
The main advantage of trading using opposite Virginia National and Carter Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia National position performs unexpectedly, Carter Bank 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 Carter Bank will offset losses from the drop in Carter Bank'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 |
| Carter Bank vs. Home Bancorp | Carter Bank vs. Community West Bancshares | Carter Bank vs. First Community | Carter Bank vs. Great Southern 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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