Correlation Between Heritage Commerce and United Bankshares
Can any of the company-specific risk be diversified away by investing in both Heritage Commerce 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 Heritage Commerce and United Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heritage Commerce Corp and United Bankshares, you can compare the effects of market volatilities on Heritage Commerce 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 Heritage Commerce with a short position of United Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Commerce and United Bankshares.
Diversification Opportunities for Heritage Commerce and United Bankshares
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Heritage and United is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Commerce Corp and United Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bankshares and Heritage Commerce 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 Heritage Commerce Corp 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 Heritage Commerce i.e., Heritage Commerce and United Bankshares go up and down completely randomly.
Pair Corralation between Heritage Commerce and United Bankshares
Given the investment horizon of 90 days Heritage Commerce Corp is expected to under-perform the United Bankshares. In addition to that, Heritage Commerce is 1.23 times more volatile than United Bankshares. It trades about -0.03 of its total potential returns per unit of risk. United Bankshares is currently generating about -0.02 per unit of volatility. If you would invest 4,043 in United Bankshares on March 2, 2024 and sell it today you would lose (858.00) from holding United Bankshares or give up 21.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Heritage Commerce Corp vs. United Bankshares
Performance |
Timeline |
Heritage Commerce Corp |
United Bankshares |
Heritage Commerce and United Bankshares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Heritage Commerce and United Bankshares
The main advantage of trading using opposite Heritage Commerce and United Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Commerce 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.Heritage Commerce vs. Home Bancorp | Heritage Commerce vs. Community West Bancshares | Heritage Commerce vs. Home Federal Bancorp | Heritage Commerce vs. Magyar Bancorp |
United Bankshares vs. Home Bancorp | United Bankshares vs. Community West Bancshares | United Bankshares vs. Home Federal Bancorp | United Bankshares vs. Magyar 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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