Correlation Between VersaBank and Veritex Holdings
Can any of the company-specific risk be diversified away by investing in both VersaBank and Veritex Holdings 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 Veritex Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and Veritex Holdings, you can compare the effects of market volatilities on VersaBank and Veritex Holdings 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 Veritex Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and Veritex Holdings.
Diversification Opportunities for VersaBank and Veritex Holdings
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VersaBank and Veritex is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and Veritex Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veritex Holdings 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 Veritex Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veritex Holdings has no effect on the direction of VersaBank i.e., VersaBank and Veritex Holdings go up and down completely randomly.
Pair Corralation between VersaBank and Veritex Holdings
Given the investment horizon of 90 days VersaBank is expected to generate 0.74 times more return on investment than Veritex Holdings. However, VersaBank is 1.36 times less risky than Veritex Holdings. It trades about 0.1 of its potential returns per unit of risk. Veritex Holdings is currently generating about 0.02 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VersaBank vs. Veritex Holdings
Performance |
| Timeline |
| VersaBank |
| Veritex Holdings |
VersaBank and Veritex Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and Veritex Holdings
The main advantage of trading using opposite VersaBank and Veritex Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, Veritex Holdings 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 Veritex Holdings will offset losses from the drop in Veritex Holdings' long position.| VersaBank vs. Mountain Commerce Bancorp | VersaBank vs. American Riviera Bank | VersaBank vs. Home Federal Bancorp | VersaBank vs. Prime Meridian Holding |
| Veritex Holdings vs. Fifth Third Bancorp | Veritex Holdings vs. Zions Bancorporation | Veritex Holdings vs. Huntington Bancshares Incorporated | Veritex Holdings vs. PNC Financial Services |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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