Correlation Between Valley National and Bank of Marin
Can any of the company-specific risk be diversified away by investing in both Valley National and Bank of Marin 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 Valley National and Bank of Marin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valley National Bancorp and Bank of Marin, you can compare the effects of market volatilities on Valley National and Bank of Marin 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 Valley National with a short position of Bank of Marin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valley National and Bank of Marin.
Diversification Opportunities for Valley National and Bank of Marin
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Valley and Bank is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Valley National Bancorp and Bank of Marin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Marin and Valley National 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 Valley National Bancorp are associated (or correlated) with Bank of Marin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Marin has no effect on the direction of Valley National i.e., Valley National and Bank of Marin go up and down completely randomly.
Pair Corralation between Valley National and Bank of Marin
Considering the 90-day investment horizon Valley National is expected to generate 1.02 times less return on investment than Bank of Marin. In addition to that, Valley National is 1.06 times more volatile than Bank of Marin. It trades about 0.05 of its total potential returns per unit of risk. Bank of Marin is currently generating about 0.05 per unit of volatility. If you would invest 1,753 in Bank of Marin on September 2, 2024 and sell it today you would earn a total of 775.00 from holding Bank of Marin or generate 44.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valley National Bancorp vs. Bank of Marin
Performance |
| Timeline |
| Valley National Bancorp |
| Bank of Marin |
Valley National and Bank of Marin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valley National and Bank of Marin
The main advantage of trading using opposite Valley National and Bank of Marin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valley National position performs unexpectedly, Bank of Marin 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 Bank of Marin will offset losses from the drop in Bank of Marin's long position.| Valley National vs. Fulton Financial | Valley National vs. Webster Financial | Valley National vs. United Bankshares | Valley National vs. FNB Corp |
| Bank of Marin vs. Community West Bancshares | Bank of Marin vs. Heritage Financial | Bank of Marin vs. First Financial Northwest | Bank of Marin vs. Sierra 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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