Correlation Between Washington Trust and Virginia National
Can any of the company-specific risk be diversified away by investing in both Washington Trust and Virginia National 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 Virginia National 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 Virginia National Bankshares, you can compare the effects of market volatilities on Washington Trust and Virginia National 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 Virginia National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Trust and Virginia National.
Diversification Opportunities for Washington Trust and Virginia National
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and Virginia is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Washington Trust Bancorp and Virginia National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virginia National 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 Virginia National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virginia National has no effect on the direction of Washington Trust i.e., Washington Trust and Virginia National go up and down completely randomly.
Pair Corralation between Washington Trust and Virginia National
Given the investment horizon of 90 days Washington Trust is expected to generate 2.04 times less return on investment than Virginia National. In addition to that, Washington Trust is 1.12 times more volatile than Virginia National Bankshares. It trades about 0.0 of its total potential returns per unit of risk. Virginia National Bankshares is currently generating about 0.01 per unit of volatility. If you would invest 3,668 in Virginia National Bankshares on November 19, 2024 and sell it today you would lose (12.00) from holding Virginia National Bankshares or give up 0.33% 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. Virginia National Bankshares
Performance |
| Timeline |
| Washington Trust Bancorp |
| Virginia National |
Washington Trust and Virginia National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Trust and Virginia National
The main advantage of trading using opposite Washington Trust and Virginia National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Trust position performs unexpectedly, Virginia National 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 Virginia National will offset losses from the drop in Virginia National's long position.| Washington Trust vs. Home Federal Bancorp | Washington Trust vs. Lake Shore Bancorp | Washington Trust vs. Old Point Financial | Washington Trust vs. Parke Bancorp |
| Virginia National vs. Finward Bancorp | Virginia National vs. Community West Bancshares | Virginia National vs. First Financial Northwest | Virginia National vs. Oak Valley 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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