Correlation Between Veritex Holdings and United Bankshares
Can any of the company-specific risk be diversified away by investing in both Veritex Holdings and United Bankshares 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 United Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veritex Holdings and United Bankshares, you can compare the effects of market volatilities on Veritex Holdings and United Bankshares 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 United Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veritex Holdings and United Bankshares.
Diversification Opportunities for Veritex Holdings and United Bankshares
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Veritex and United is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Veritex Holdings and United Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bankshares 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 United Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bankshares has no effect on the direction of Veritex Holdings i.e., Veritex Holdings and United Bankshares go up and down completely randomly.
Pair Corralation between Veritex Holdings and United Bankshares
Given the investment horizon of 90 days Veritex Holdings is expected to generate 1.06 times more return on investment than United Bankshares. However, Veritex Holdings is 1.06 times more volatile than United Bankshares. It trades about 0.19 of its potential returns per unit of risk. United Bankshares is currently generating about 0.19 per unit of risk. If you would invest 2,759 in Veritex Holdings on August 28, 2024 and sell it today you would earn a total of 367.00 from holding Veritex Holdings or generate 13.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veritex Holdings vs. United Bankshares
Performance |
| Timeline |
| Veritex Holdings |
| United Bankshares |
Veritex Holdings and United Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veritex Holdings and United Bankshares
The main advantage of trading using opposite Veritex Holdings and United Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veritex Holdings position performs unexpectedly, United Bankshares 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 United Bankshares will offset losses from the drop in United Bankshares' long position.| Veritex Holdings vs. Fifth Third Bancorp | Veritex Holdings vs. Zions Bancorporation | Veritex Holdings vs. Huntington Bancshares Incorporated | Veritex Holdings vs. Comerica |
| United Bankshares vs. Peoples Bancorp | United Bankshares vs. Eagle Bancorp | United Bankshares vs. Northrim BanCorp | United Bankshares vs. Pacific Premier 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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