Correlation Between VersaBank and Lakeland Financial
Can any of the company-specific risk be diversified away by investing in both VersaBank and Lakeland Financial 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 Lakeland Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and Lakeland Financial, you can compare the effects of market volatilities on VersaBank and Lakeland Financial 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 Lakeland Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and Lakeland Financial.
Diversification Opportunities for VersaBank and Lakeland Financial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VersaBank and Lakeland is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and Lakeland Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland Financial 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 Lakeland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Financial has no effect on the direction of VersaBank i.e., VersaBank and Lakeland Financial go up and down completely randomly.
Pair Corralation between VersaBank and Lakeland Financial
Given the investment horizon of 90 days VersaBank is expected to generate 1.01 times more return on investment than Lakeland Financial. However, VersaBank is 1.01 times more volatile than Lakeland Financial. It trades about 0.15 of its potential returns per unit of risk. Lakeland Financial is currently generating about 0.07 per unit of risk. If you would invest 773.00 in VersaBank on August 24, 2024 and sell it today you would earn a total of 939.00 from holding VersaBank or generate 121.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
VersaBank vs. Lakeland Financial
Performance |
| Timeline |
| VersaBank |
| Lakeland Financial |
VersaBank and Lakeland Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and Lakeland Financial
The main advantage of trading using opposite VersaBank and Lakeland Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, Lakeland Financial 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 Lakeland Financial will offset losses from the drop in Lakeland Financial's long position.| VersaBank vs. Banco Bradesco SA | VersaBank vs. Itau Unibanco Banco | VersaBank vs. Banco Santander Brasil | VersaBank vs. Western Alliance Bancorporation |
| Lakeland Financial vs. Home Bancorp | Lakeland Financial vs. Heritage Financial | Lakeland Financial vs. First Northwest Bancorp | Lakeland Financial vs. HomeTrust 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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