Correlation Between Washington Trust and VersaBank
Can any of the company-specific risk be diversified away by investing in both Washington Trust and VersaBank 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 VersaBank 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 VersaBank, you can compare the effects of market volatilities on Washington Trust and VersaBank 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 VersaBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Trust and VersaBank.
Diversification Opportunities for Washington Trust and VersaBank
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and VersaBank is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Washington Trust Bancorp and VersaBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VersaBank 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 VersaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VersaBank has no effect on the direction of Washington Trust i.e., Washington Trust and VersaBank go up and down completely randomly.
Pair Corralation between Washington Trust and VersaBank
Given the investment horizon of 90 days Washington Trust is expected to generate 11.82 times less return on investment than VersaBank. In addition to that, Washington Trust is 1.2 times more volatile than VersaBank. It trades about 0.0 of its total potential returns per unit of risk. VersaBank is currently generating about 0.07 per unit of volatility. If you would invest 735.00 in VersaBank on November 19, 2024 and sell it today you would earn a total of 631.00 from holding VersaBank or generate 85.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Trust Bancorp vs. VersaBank
Performance |
| Timeline |
| Washington Trust Bancorp |
| VersaBank |
Washington Trust and VersaBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Trust and VersaBank
The main advantage of trading using opposite Washington Trust and VersaBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Trust position performs unexpectedly, VersaBank 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 VersaBank will offset losses from the drop in VersaBank'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 |
| VersaBank vs. Mountain Commerce Bancorp | VersaBank vs. American Riviera Bank | VersaBank vs. Home Federal Bancorp | VersaBank vs. Village Bank and |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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