Correlation Between VersaBank and First United
Can any of the company-specific risk be diversified away by investing in both VersaBank and First United 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 United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and First United, you can compare the effects of market volatilities on VersaBank and First United 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 United. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and First United.
Diversification Opportunities for VersaBank and First United
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VersaBank and First is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and First United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First United 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 United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First United has no effect on the direction of VersaBank i.e., VersaBank and First United go up and down completely randomly.
Pair Corralation between VersaBank and First United
Given the investment horizon of 90 days VersaBank is expected to generate 1.69 times more return on investment than First United. However, VersaBank is 1.69 times more volatile than First United. It trades about 0.21 of its potential returns per unit of risk. First United is currently generating about 0.28 per unit of risk. If you would invest 1,333 in VersaBank on August 29, 2024 and sell it today you would earn a total of 415.00 from holding VersaBank or generate 31.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VersaBank vs. First United
Performance |
| Timeline |
| VersaBank |
| First United |
VersaBank and First United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and First United
The main advantage of trading using opposite VersaBank and First United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, First United 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 United will offset losses from the drop in First United's long position.| VersaBank vs. Home Federal Bancorp | VersaBank vs. First Northwest Bancorp | VersaBank vs. First Financial Northwest | VersaBank vs. First Capital |
| First United vs. First Community | First United vs. Greene County Bancorp | First United vs. Community West Bancshares | First United vs. Affinity 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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