Correlation Between VersaBank and Orrstown Financial
Can any of the company-specific risk be diversified away by investing in both VersaBank and Orrstown 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 Orrstown Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and Orrstown Financial Services, you can compare the effects of market volatilities on VersaBank and Orrstown 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 Orrstown Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and Orrstown Financial.
Diversification Opportunities for VersaBank and Orrstown Financial
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VersaBank and Orrstown is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and Orrstown Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orrstown 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 Orrstown Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orrstown Financial has no effect on the direction of VersaBank i.e., VersaBank and Orrstown Financial go up and down completely randomly.
Pair Corralation between VersaBank and Orrstown Financial
Given the investment horizon of 90 days VersaBank is expected to generate 1.04 times more return on investment than Orrstown Financial. However, VersaBank is 1.04 times more volatile than Orrstown Financial Services. It trades about 0.13 of its potential returns per unit of risk. Orrstown Financial Services is currently generating about 0.12 per unit of risk. If you would invest 743.00 in VersaBank on August 28, 2024 and sell it today you would earn a total of 1,016 from holding VersaBank or generate 136.74% 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. Orrstown Financial Services
Performance |
| Timeline |
| VersaBank |
| Orrstown Financial |
VersaBank and Orrstown Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and Orrstown Financial
The main advantage of trading using opposite VersaBank and Orrstown Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, Orrstown 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 Orrstown Financial will offset losses from the drop in Orrstown Financial's long position.| VersaBank vs. Mountain Commerce Bancorp | VersaBank vs. American Riviera Bank | VersaBank vs. Home Federal Bancorp | VersaBank vs. Prime Meridian Holding |
| Orrstown Financial vs. Home Federal Bancorp | Orrstown Financial vs. LINKBANCORP | Orrstown Financial vs. Rhinebeck Bancorp | Orrstown Financial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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