Correlation Between VersaBank and Tectonic Financial
Can any of the company-specific risk be diversified away by investing in both VersaBank and Tectonic 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 Tectonic Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and Tectonic Financial PR, you can compare the effects of market volatilities on VersaBank and Tectonic 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 Tectonic Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and Tectonic Financial.
Diversification Opportunities for VersaBank and Tectonic Financial
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VersaBank and Tectonic is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and Tectonic Financial PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectonic 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 Tectonic Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectonic Financial has no effect on the direction of VersaBank i.e., VersaBank and Tectonic Financial go up and down completely randomly.
Pair Corralation between VersaBank and Tectonic Financial
Given the investment horizon of 90 days VersaBank is expected to generate 1.62 times more return on investment than Tectonic Financial. However, VersaBank is 1.62 times more volatile than Tectonic Financial PR. It trades about 0.1 of its potential returns per unit of risk. Tectonic Financial PR is currently generating about 0.04 per unit of risk. If you would invest 678.00 in VersaBank on August 27, 2024 and sell it today you would earn a total of 1,034 from holding VersaBank or generate 152.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VersaBank vs. Tectonic Financial PR
Performance |
| Timeline |
| VersaBank |
| Tectonic Financial |
VersaBank and Tectonic Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and Tectonic Financial
The main advantage of trading using opposite VersaBank and Tectonic Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, Tectonic 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 Tectonic Financial will offset losses from the drop in Tectonic Financial's long position.| VersaBank vs. Mountain Commerce Bancorp | VersaBank vs. American Riviera Bank | VersaBank vs. Home Federal Bancorp | VersaBank vs. Prime Meridian Holding |
| Tectonic Financial vs. First Guaranty Bancshares | Tectonic Financial vs. First Merchants | Tectonic Financial vs. Associated Banc Corp | Tectonic Financial vs. Absa Group Limited |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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