Correlation Between Virginia National and Northfield Bancorp
Can any of the company-specific risk be diversified away by investing in both Virginia National and Northfield Bancorp 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 Northfield Bancorp 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 Northfield Bancorp, you can compare the effects of market volatilities on Virginia National and Northfield Bancorp 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 Northfield Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and Northfield Bancorp.
Diversification Opportunities for Virginia National and Northfield Bancorp
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virginia and Northfield is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and Northfield Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northfield Bancorp 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 Northfield Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northfield Bancorp has no effect on the direction of Virginia National i.e., Virginia National and Northfield Bancorp go up and down completely randomly.
Pair Corralation between Virginia National and Northfield Bancorp
Given the investment horizon of 90 days Virginia National Bankshares is expected to generate 0.94 times more return on investment than Northfield Bancorp. However, Virginia National Bankshares is 1.06 times less risky than Northfield Bancorp. It trades about 0.03 of its potential returns per unit of risk. Northfield Bancorp is currently generating about 0.01 per unit of risk. If you would invest 3,242 in Virginia National Bankshares on August 30, 2024 and sell it today you would earn a total of 948.00 from holding Virginia National Bankshares or generate 29.24% 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. Northfield Bancorp
Performance |
| Timeline |
| Virginia National |
| Northfield Bancorp |
Virginia National and Northfield Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virginia National and Northfield Bancorp
The main advantage of trading using opposite Virginia National and Northfield Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia National position performs unexpectedly, Northfield Bancorp 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 Northfield Bancorp will offset losses from the drop in Northfield Bancorp'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 |
| Northfield Bancorp vs. Finward Bancorp | Northfield Bancorp vs. Community West Bancshares | Northfield Bancorp vs. First Financial Northwest | Northfield Bancorp vs. Home 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |