Correlation Between VersaBank and First Foundation
Can any of the company-specific risk be diversified away by investing in both VersaBank and First Foundation 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 First Foundation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and First Foundation, you can compare the effects of market volatilities on VersaBank and First Foundation 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 First Foundation. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and First Foundation.
Diversification Opportunities for VersaBank and First Foundation
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VersaBank and First is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and First Foundation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Foundation 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 First Foundation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Foundation has no effect on the direction of VersaBank i.e., VersaBank and First Foundation go up and down completely randomly.
Pair Corralation between VersaBank and First Foundation
Given the investment horizon of 90 days VersaBank is expected to generate 0.4 times more return on investment than First Foundation. However, VersaBank is 2.48 times less risky than First Foundation. It trades about 0.1 of its potential returns per unit of risk. First Foundation is currently generating about 0.0 per unit of risk. If you would invest 738.00 in VersaBank on September 3, 2024 and sell it today you would earn a total of 1,061 from holding VersaBank or generate 143.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
VersaBank vs. First Foundation
Performance |
Timeline |
VersaBank |
First Foundation |
VersaBank and First Foundation Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with VersaBank and First Foundation
The main advantage of trading using opposite VersaBank and First Foundation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, First Foundation 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 First Foundation will offset losses from the drop in First Foundation's long position.VersaBank vs. JPMorgan Chase Co | VersaBank vs. Citigroup | VersaBank vs. Wells Fargo | VersaBank vs. Toronto Dominion Bank |
First Foundation vs. Veritex Holdings | First Foundation vs. ConnectOne Bancorp | First Foundation vs. The First Bancshares, | First Foundation vs. First Mid Illinois |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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