Correlation Between VersaBank and Bridgewater Bancshares
Can any of the company-specific risk be diversified away by investing in both VersaBank and Bridgewater Bancshares 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 VersaBank and Bridgewater Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and Bridgewater Bancshares, you can compare the effects of market volatilities on VersaBank and Bridgewater Bancshares 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 VersaBank with a short position of Bridgewater Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and Bridgewater Bancshares.
Diversification Opportunities for VersaBank and Bridgewater Bancshares
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VersaBank and Bridgewater is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and Bridgewater Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgewater Bancshares and VersaBank 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 VersaBank are associated (or correlated) with Bridgewater Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgewater Bancshares has no effect on the direction of VersaBank i.e., VersaBank and Bridgewater Bancshares go up and down completely randomly.
Pair Corralation between VersaBank and Bridgewater Bancshares
Given the investment horizon of 90 days VersaBank is expected to generate 1.06 times more return on investment than Bridgewater Bancshares. However, VersaBank is 1.06 times more volatile than Bridgewater Bancshares. It trades about 0.15 of its potential returns per unit of risk. Bridgewater Bancshares is currently generating about 0.06 per unit of risk. If you would invest 806.00 in VersaBank on September 4, 2024 and sell it today you would earn a total of 926.00 from holding VersaBank or generate 114.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VersaBank vs. Bridgewater Bancshares
Performance |
| Timeline |
| VersaBank |
| Bridgewater Bancshares |
VersaBank and Bridgewater Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and Bridgewater Bancshares
The main advantage of trading using opposite VersaBank and Bridgewater Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, Bridgewater Bancshares 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 Bridgewater Bancshares will offset losses from the drop in Bridgewater Bancshares' long position.| VersaBank vs. International Bancshares | VersaBank vs. Finward Bancorp | VersaBank vs. Aquagold International | VersaBank vs. Thrivent High Yield |
| Bridgewater Bancshares vs. International Bancshares | Bridgewater Bancshares vs. Finward Bancorp | Bridgewater Bancshares vs. Aquagold International | Bridgewater Bancshares vs. Thrivent High Yield |
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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