Correlation Between Virginia National and Plumas Bancorp
Can any of the company-specific risk be diversified away by investing in both Virginia National and Plumas 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 Plumas 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 Plumas Bancorp, you can compare the effects of market volatilities on Virginia National and Plumas 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 Plumas Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and Plumas Bancorp.
Diversification Opportunities for Virginia National and Plumas Bancorp
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Virginia and Plumas is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and Plumas Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumas 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 Plumas Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumas Bancorp has no effect on the direction of Virginia National i.e., Virginia National and Plumas Bancorp go up and down completely randomly.
Pair Corralation between Virginia National and Plumas Bancorp
Given the investment horizon of 90 days Virginia National Bankshares is expected to generate 1.03 times more return on investment than Plumas Bancorp. However, Virginia National is 1.03 times more volatile than Plumas Bancorp. It trades about 0.09 of its potential returns per unit of risk. Plumas Bancorp is currently generating about -0.08 per unit of risk. If you would invest 3,554 in Virginia National Bankshares on November 18, 2024 and sell it today you would earn a total of 102.00 from holding Virginia National Bankshares or generate 2.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virginia National Bankshares vs. Plumas Bancorp
Performance |
| Timeline |
| Virginia National |
| Plumas Bancorp |
Virginia National and Plumas Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virginia National and Plumas Bancorp
The main advantage of trading using opposite Virginia National and Plumas Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia National position performs unexpectedly, Plumas 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 Plumas Bancorp will offset losses from the drop in Plumas 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 |
| Plumas Bancorp vs. Home Federal Bancorp | Plumas Bancorp vs. First Northwest Bancorp | Plumas Bancorp vs. Lake Shore Bancorp | Plumas Bancorp vs. Community West Bancshares |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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