Correlation Between Valley National and SunHydrogen
Can any of the company-specific risk be diversified away by investing in both Valley National and SunHydrogen 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 SunHydrogen 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 SunHydrogen, you can compare the effects of market volatilities on Valley National and SunHydrogen 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 SunHydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valley National and SunHydrogen.
Diversification Opportunities for Valley National and SunHydrogen
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Valley and SunHydrogen is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Valley National Bancorp and SunHydrogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunHydrogen 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 SunHydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunHydrogen has no effect on the direction of Valley National i.e., Valley National and SunHydrogen go up and down completely randomly.
Pair Corralation between Valley National and SunHydrogen
Considering the 90-day investment horizon Valley National Bancorp is expected to generate 0.45 times more return on investment than SunHydrogen. However, Valley National Bancorp is 2.23 times less risky than SunHydrogen. It trades about -0.11 of its potential returns per unit of risk. SunHydrogen is currently generating about -0.08 per unit of risk. If you would invest 1,028 in Valley National Bancorp on December 2, 2024 and sell it today you would lose (44.00) from holding Valley National Bancorp or give up 4.28% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Valley National Bancorp vs. SunHydrogen
Performance |
Timeline |
Valley National Bancorp |
SunHydrogen |
Valley National and SunHydrogen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Valley National and SunHydrogen
The main advantage of trading using opposite Valley National and SunHydrogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valley National position performs unexpectedly, SunHydrogen 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 SunHydrogen will offset losses from the drop in SunHydrogen's long position.Valley National vs. Fulton Financial | ||
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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