Correlation Between VersaBank and Renasant
Can any of the company-specific risk be diversified away by investing in both VersaBank and Renasant 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 Renasant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and Renasant, you can compare the effects of market volatilities on VersaBank and Renasant 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 Renasant. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and Renasant.
Diversification Opportunities for VersaBank and Renasant
Very poor diversification
The 3 months correlation between VersaBank and Renasant is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and Renasant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renasant 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 Renasant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renasant has no effect on the direction of VersaBank i.e., VersaBank and Renasant go up and down completely randomly.
Pair Corralation between VersaBank and Renasant
Given the investment horizon of 90 days VersaBank is expected to generate 1.09 times more return on investment than Renasant. However, VersaBank is 1.09 times more volatile than Renasant. It trades about 0.11 of its potential returns per unit of risk. Renasant is currently generating about 0.06 per unit of risk. If you would invest 1,123 in VersaBank on August 28, 2024 and sell it today you would earn a total of 636.00 from holding VersaBank or generate 56.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VersaBank vs. Renasant
Performance |
| Timeline |
| VersaBank |
| Renasant |
VersaBank and Renasant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and Renasant
The main advantage of trading using opposite VersaBank and Renasant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, Renasant 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 Renasant will offset losses from the drop in Renasant's long position.| VersaBank vs. Mountain Commerce Bancorp | VersaBank vs. American Riviera Bank | VersaBank vs. Home Federal Bancorp | VersaBank vs. Prime Meridian Holding |
| Renasant vs. Simmons First National | Renasant vs. Trustmark | Renasant vs. Sandy Spring Bancorp | Renasant vs. Stock Yards 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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