Correlation Between VersaBank and Premier Financial
Can any of the company-specific risk be diversified away by investing in both VersaBank and Premier 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 Premier Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and Premier Financial Corp, you can compare the effects of market volatilities on VersaBank and Premier 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 Premier Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and Premier Financial.
Diversification Opportunities for VersaBank and Premier Financial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VersaBank and Premier is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and Premier Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Financial Corp 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 Premier Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Financial Corp has no effect on the direction of VersaBank i.e., VersaBank and Premier Financial go up and down completely randomly.
Pair Corralation between VersaBank and Premier Financial
Given the investment horizon of 90 days VersaBank is expected to generate 0.53 times more return on investment than Premier Financial. However, VersaBank is 1.88 times less risky than Premier Financial. It trades about 0.45 of its potential returns per unit of risk. Premier Financial Corp is currently generating about 0.17 per unit of risk. If you would invest 1,500 in VersaBank on September 1, 2024 and sell it today you would earn a total of 299.00 from holding VersaBank or generate 19.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VersaBank vs. Premier Financial Corp
Performance |
| Timeline |
| VersaBank |
| Premier Financial Corp |
VersaBank and Premier Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and Premier Financial
The main advantage of trading using opposite VersaBank and Premier Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, Premier 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 Premier Financial will offset losses from the drop in Premier Financial's long position.| VersaBank vs. Mountain Commerce Bancorp | VersaBank vs. American Riviera Bank | VersaBank vs. Home Federal Bancorp | VersaBank vs. Prime Meridian Holding |
| Premier Financial vs. Bankwell Financial Group | Premier Financial vs. Middlefield Banc | Premier Financial vs. Civista Bancshares | Premier Financial vs. Primis Financial Corp |
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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