Correlation Between Veritex Holdings and BCB Bancorp
Can any of the company-specific risk be diversified away by investing in both Veritex Holdings and BCB Bancorp 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 Veritex Holdings and BCB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veritex Holdings and BCB Bancorp, you can compare the effects of market volatilities on Veritex Holdings and BCB Bancorp 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 Veritex Holdings with a short position of BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veritex Holdings and BCB Bancorp.
Diversification Opportunities for Veritex Holdings and BCB Bancorp
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Veritex and BCB is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Veritex Holdings and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp and Veritex Holdings 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 Veritex Holdings are associated (or correlated) with BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of Veritex Holdings i.e., Veritex Holdings and BCB Bancorp go up and down completely randomly.
Pair Corralation between Veritex Holdings and BCB Bancorp
Given the investment horizon of 90 days Veritex Holdings is expected to generate 0.92 times more return on investment than BCB Bancorp. However, Veritex Holdings is 1.09 times less risky than BCB Bancorp. It trades about -0.06 of its potential returns per unit of risk. BCB Bancorp is currently generating about -0.16 per unit of risk. If you would invest 2,893 in Veritex Holdings on November 18, 2024 and sell it today you would lose (235.00) from holding Veritex Holdings or give up 8.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veritex Holdings vs. BCB Bancorp
Performance |
| Timeline |
| Veritex Holdings |
| BCB Bancorp |
Veritex Holdings and BCB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veritex Holdings and BCB Bancorp
The main advantage of trading using opposite Veritex Holdings and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veritex Holdings position performs unexpectedly, BCB Bancorp 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's long position.| Veritex Holdings vs. Finward Bancorp | Veritex Holdings vs. Franklin Financial Services | Veritex Holdings vs. Home Bancorp | Veritex Holdings vs. LINKBANCORP |
| BCB Bancorp vs. Provident Financial Services | BCB Bancorp vs. First Mid Illinois | BCB Bancorp vs. ConnectOne Bancorp | BCB Bancorp vs. Finward 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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