Correlation Between VersaBank and ServisFirst Bancshares
Can any of the company-specific risk be diversified away by investing in both VersaBank and ServisFirst Bancshares 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 ServisFirst Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and ServisFirst Bancshares, you can compare the effects of market volatilities on VersaBank and ServisFirst Bancshares 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 ServisFirst Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and ServisFirst Bancshares.
Diversification Opportunities for VersaBank and ServisFirst Bancshares
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VersaBank and ServisFirst is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and ServisFirst Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServisFirst Bancshares 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 ServisFirst Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServisFirst Bancshares has no effect on the direction of VersaBank i.e., VersaBank and ServisFirst Bancshares go up and down completely randomly.
Pair Corralation between VersaBank and ServisFirst Bancshares
Given the investment horizon of 90 days VersaBank is expected to generate 0.67 times more return on investment than ServisFirst Bancshares. However, VersaBank is 1.5 times less risky than ServisFirst Bancshares. It trades about 0.43 of its potential returns per unit of risk. ServisFirst Bancshares is currently generating about 0.24 per unit of risk. If you would invest 1,475 in VersaBank on August 28, 2024 and sell it today you would earn a total of 284.00 from holding VersaBank or generate 19.25% 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. ServisFirst Bancshares
Performance |
| Timeline |
| VersaBank |
| ServisFirst Bancshares |
VersaBank and ServisFirst Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and ServisFirst Bancshares
The main advantage of trading using opposite VersaBank and ServisFirst Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, ServisFirst Bancshares 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 ServisFirst Bancshares will offset losses from the drop in ServisFirst Bancshares' long position.| VersaBank vs. Fifth Third Bancorp | VersaBank vs. Zions Bancorporation | VersaBank vs. Huntington Bancshares Incorporated | VersaBank vs. Comerica |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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