Correlation Between VersaBank and ECB Bancorp
Can any of the company-specific risk be diversified away by investing in both VersaBank and ECB 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 VersaBank and ECB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and ECB Bancorp, you can compare the effects of market volatilities on VersaBank and ECB 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 VersaBank with a short position of ECB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and ECB Bancorp.
Diversification Opportunities for VersaBank and ECB Bancorp
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VersaBank and ECB is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and ECB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECB Bancorp 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 ECB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECB Bancorp has no effect on the direction of VersaBank i.e., VersaBank and ECB Bancorp go up and down completely randomly.
Pair Corralation between VersaBank and ECB Bancorp
Given the investment horizon of 90 days VersaBank is expected to generate 1.74 times more return on investment than ECB Bancorp. However, VersaBank is 1.74 times more volatile than ECB Bancorp. It trades about 0.42 of its potential returns per unit of risk. ECB Bancorp is currently generating about -0.02 per unit of risk. If you would invest 1,475 in VersaBank on August 29, 2024 and sell it today you would earn a total of 298.00 from holding VersaBank or generate 20.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VersaBank vs. ECB Bancorp
Performance |
| Timeline |
| VersaBank |
| ECB Bancorp |
VersaBank and ECB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and ECB Bancorp
The main advantage of trading using opposite VersaBank and ECB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, ECB 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 ECB Bancorp will offset losses from the drop in ECB Bancorp's long position.| VersaBank vs. Mountain Commerce Bancorp | VersaBank vs. American Riviera Bank | VersaBank vs. Home Federal Bancorp | VersaBank vs. Prime Meridian Holding |
| ECB Bancorp vs. Home Federal Bancorp | ECB Bancorp vs. Magyar Bancorp | ECB Bancorp vs. Community West Bancshares | ECB Bancorp vs. Lake Shore 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |