Correlation Between Washington Trust and United Bankshares
Can any of the company-specific risk be diversified away by investing in both Washington Trust 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 Washington Trust and United Bankshares 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 Bankshares, you can compare the effects of market volatilities on Washington Trust 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 Washington Trust with a short position of United Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Trust and United Bankshares.
Diversification Opportunities for Washington Trust and United Bankshares
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and United is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Washington Trust Bancorp and United Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bankshares 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 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 Washington Trust i.e., Washington Trust and United Bankshares go up and down completely randomly.
Pair Corralation between Washington Trust and United Bankshares
Given the investment horizon of 90 days Washington Trust Bancorp is expected to under-perform the United Bankshares. In addition to that, Washington Trust is 1.27 times more volatile than United Bankshares. It trades about -0.01 of its total potential returns per unit of risk. United Bankshares is currently generating about 0.01 per unit of volatility. If you would invest 3,619 in United Bankshares on October 14, 2024 and sell it today you would lose (45.00) from holding United Bankshares or give up 1.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Trust Bancorp vs. United Bankshares
Performance |
| Timeline |
| Washington Trust Bancorp |
| United Bankshares |
Washington Trust and United Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Trust and United Bankshares
The main advantage of trading using opposite Washington Trust and United Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Trust 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.| Washington Trust vs. Univest Pennsylvania | Washington Trust vs. Waterstone Financial | Washington Trust vs. Mid Penn Bancorp | Washington Trust vs. ST Bancorp |
| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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