Correlation Between VersaBank and City Holding
Can any of the company-specific risk be diversified away by investing in both VersaBank and City Holding 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 City Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and City Holding, you can compare the effects of market volatilities on VersaBank and City Holding 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 City Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and City Holding.
Diversification Opportunities for VersaBank and City Holding
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VersaBank and City is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and City Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Holding 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 City Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Holding has no effect on the direction of VersaBank i.e., VersaBank and City Holding go up and down completely randomly.
Pair Corralation between VersaBank and City Holding
Given the investment horizon of 90 days VersaBank is expected to generate 1.22 times more return on investment than City Holding. However, VersaBank is 1.22 times more volatile than City Holding. It trades about 0.11 of its potential returns per unit of risk. City Holding is currently generating about 0.05 per unit of risk. If you would invest 656.00 in VersaBank on August 26, 2024 and sell it today you would earn a total of 1,047 from holding VersaBank or generate 159.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VersaBank vs. City Holding
Performance |
| Timeline |
| VersaBank |
| City Holding |
VersaBank and City Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and City Holding
The main advantage of trading using opposite VersaBank and City Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, City Holding 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 City Holding will offset losses from the drop in City Holding's long position.| VersaBank vs. Mountain Commerce Bancorp | VersaBank vs. American Riviera Bank | VersaBank vs. Home Federal Bancorp | VersaBank vs. Village Bank and |
| City Holding vs. Community West Bancshares | City Holding vs. Oak Valley Bancorp | City Holding vs. Home Federal Bancorp | City Holding vs. Magyar 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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