Correlation Between Washington Trust and Stock Yards
Can any of the company-specific risk be diversified away by investing in both Washington Trust and Stock Yards 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 Washington Trust and Stock Yards into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Trust Bancorp and Stock Yards Bancorp, you can compare the effects of market volatilities on Washington Trust and Stock Yards 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 Washington Trust with a short position of Stock Yards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Trust and Stock Yards.
Diversification Opportunities for Washington Trust and Stock Yards
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Washington and Stock is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Washington Trust Bancorp and Stock Yards Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stock Yards Bancorp and Washington Trust 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 Washington Trust Bancorp are associated (or correlated) with Stock Yards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stock Yards Bancorp has no effect on the direction of Washington Trust i.e., Washington Trust and Stock Yards go up and down completely randomly.
Pair Corralation between Washington Trust and Stock Yards
Given the investment horizon of 90 days Washington Trust is expected to generate 2.02 times less return on investment than Stock Yards. In addition to that, Washington Trust is 1.22 times more volatile than Stock Yards Bancorp. It trades about 0.1 of its total potential returns per unit of risk. Stock Yards Bancorp is currently generating about 0.23 per unit of volatility. If you would invest 6,690 in Stock Yards Bancorp on August 28, 2024 and sell it today you would earn a total of 1,052 from holding Stock Yards Bancorp or generate 15.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Trust Bancorp vs. Stock Yards Bancorp
Performance |
| Timeline |
| Washington Trust Bancorp |
| Stock Yards Bancorp |
Washington Trust and Stock Yards Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Trust and Stock Yards
The main advantage of trading using opposite Washington Trust and Stock Yards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Trust position performs unexpectedly, Stock Yards 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 Stock Yards will offset losses from the drop in Stock Yards' long position.| Washington Trust vs. Univest Pennsylvania | Washington Trust vs. Waterstone Financial | Washington Trust vs. Mid Penn Bancorp | Washington Trust vs. ST Bancorp |
| Stock Yards vs. First National Corp | Stock Yards vs. Southern Missouri Bancorp | Stock Yards vs. Shore Bancshares | Stock Yards vs. First Capital |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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