Correlation Between Veritex Holdings and First United
Can any of the company-specific risk be diversified away by investing in both Veritex Holdings and First United 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 First United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veritex Holdings and First United, you can compare the effects of market volatilities on Veritex Holdings and First United 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 First United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veritex Holdings and First United.
Diversification Opportunities for Veritex Holdings and First United
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Veritex and First is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Veritex Holdings and First United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First United 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 First United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First United has no effect on the direction of Veritex Holdings i.e., Veritex Holdings and First United go up and down completely randomly.
Pair Corralation between Veritex Holdings and First United
Given the investment horizon of 90 days Veritex Holdings is expected to generate 1.34 times less return on investment than First United. In addition to that, Veritex Holdings is 1.43 times more volatile than First United. It trades about 0.15 of its total potential returns per unit of risk. First United is currently generating about 0.29 per unit of volatility. If you would invest 1,969 in First United on August 25, 2024 and sell it today you would earn a total of 1,528 from holding First United or generate 77.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veritex Holdings vs. First United
Performance |
| Timeline |
| Veritex Holdings |
| First United |
Veritex Holdings and First United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veritex Holdings and First United
The main advantage of trading using opposite Veritex Holdings and First United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veritex Holdings position performs unexpectedly, First United 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 First United will offset losses from the drop in First United's long position.| Veritex Holdings vs. Fifth Third Bancorp | Veritex Holdings vs. Zions Bancorporation | Veritex Holdings vs. Huntington Bancshares Incorporated | Veritex Holdings vs. PNC Financial Services |
| First United vs. First Community | First United vs. Greene County Bancorp | First United vs. Community West Bancshares | First United vs. Affinity Bancshares |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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