Correlation Between Virginia National and SHF Holdings
Can any of the company-specific risk be diversified away by investing in both Virginia National and SHF Holdings 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 SHF Holdings 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 SHF Holdings, you can compare the effects of market volatilities on Virginia National and SHF Holdings 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 SHF Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and SHF Holdings.
Diversification Opportunities for Virginia National and SHF Holdings
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Virginia and SHF is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and SHF Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHF Holdings 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 SHF Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHF Holdings has no effect on the direction of Virginia National i.e., Virginia National and SHF Holdings go up and down completely randomly.
Pair Corralation between Virginia National and SHF Holdings
Given the investment horizon of 90 days Virginia National Bankshares is expected to generate 0.23 times more return on investment than SHF Holdings. However, Virginia National Bankshares is 4.35 times less risky than SHF Holdings. It trades about 0.04 of its potential returns per unit of risk. SHF Holdings is currently generating about -0.01 per unit of risk. If you would invest 4,109 in Virginia National Bankshares on August 29, 2024 and sell it today you would earn a total of 55.00 from holding Virginia National Bankshares or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Virginia National Bankshares vs. SHF Holdings
Performance |
| Timeline |
| Virginia National |
| SHF Holdings |
Virginia National and SHF Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virginia National and SHF Holdings
The main advantage of trading using opposite Virginia National and SHF Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia National position performs unexpectedly, SHF Holdings 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 SHF Holdings will offset losses from the drop in SHF Holdings' long position.The idea behind Virginia National Bankshares and SHF Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SHF Holdings vs. Finward Bancorp | SHF Holdings vs. Northfield Bancorp | SHF Holdings vs. Community West Bancshares | SHF Holdings vs. First Community |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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