Correlation Between Virginia National and Third Coast
Can any of the company-specific risk be diversified away by investing in both Virginia National and Third Coast 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 Third Coast 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 Third Coast Bancshares, you can compare the effects of market volatilities on Virginia National and Third Coast 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 Third Coast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and Third Coast.
Diversification Opportunities for Virginia National and Third Coast
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virginia and Third is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and Third Coast Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Coast Bancshares 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 Third Coast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Coast Bancshares has no effect on the direction of Virginia National i.e., Virginia National and Third Coast go up and down completely randomly.
Pair Corralation between Virginia National and Third Coast
Given the investment horizon of 90 days Virginia National is expected to generate 5.76 times less return on investment than Third Coast. In addition to that, Virginia National is 1.11 times more volatile than Third Coast Bancshares. It trades about 0.04 of its total potential returns per unit of risk. Third Coast Bancshares is currently generating about 0.27 per unit of volatility. If you would invest 3,280 in Third Coast Bancshares on August 29, 2024 and sell it today you would earn a total of 320.00 from holding Third Coast Bancshares or generate 9.76% 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. Third Coast Bancshares
Performance |
| Timeline |
| Virginia National |
| Third Coast Bancshares |
Virginia National and Third Coast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virginia National and Third Coast
The main advantage of trading using opposite Virginia National and Third Coast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia National position performs unexpectedly, Third Coast 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 Third Coast will offset losses from the drop in Third Coast'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 |
| Third Coast vs. Byline Bancorp | Third Coast vs. Coastal Financial Corp | Third Coast vs. NBT Bancorp | Third Coast 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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