Correlation Between Washington Trust and United Bancorp
Can any of the company-specific risk be diversified away by investing in both Washington Trust and United Bancorp 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 United Bancorp 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 United Bancorp, you can compare the effects of market volatilities on Washington Trust and United Bancorp 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 United Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Trust and United Bancorp.
Diversification Opportunities for Washington Trust and United Bancorp
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Washington and United is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Washington Trust Bancorp and United Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United 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 United Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bancorp has no effect on the direction of Washington Trust i.e., Washington Trust and United Bancorp go up and down completely randomly.
Pair Corralation between Washington Trust and United Bancorp
Given the investment horizon of 90 days Washington Trust Bancorp is expected to generate 0.69 times more return on investment than United Bancorp. However, Washington Trust Bancorp is 1.45 times less risky than United Bancorp. It trades about 0.19 of its potential returns per unit of risk. United Bancorp is currently generating about -0.02 per unit of risk. If you would invest 3,055 in Washington Trust Bancorp on October 29, 2024 and sell it today you would earn a total of 192.00 from holding Washington Trust Bancorp or generate 6.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Washington Trust Bancorp vs. United Bancorp
Performance |
| Timeline |
| Washington Trust Bancorp |
| United Bancorp |
Washington Trust and United Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Trust and United Bancorp
The main advantage of trading using opposite Washington Trust and United Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Trust position performs unexpectedly, United Bancorp 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 Bancorp will offset losses from the drop in United Bancorp's long position.| Washington Trust vs. Univest Pennsylvania | Washington Trust vs. Waterstone Financial | Washington Trust vs. Mid Penn Bancorp | Washington Trust vs. ST Bancorp |
| United Bancorp vs. Rhinebeck Bancorp | United Bancorp vs. Shore Bancshares | United Bancorp vs. First Northwest Bancorp | United Bancorp vs. Community West 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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