Correlation Between Univest Pennsylvania and Lakeland Bancorp

Can any of the company-specific risk be diversified away by investing in both Univest Pennsylvania and Lakeland 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 Univest Pennsylvania and Lakeland Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Univest Pennsylvania and Lakeland Bancorp, you can compare the effects of market volatilities on Univest Pennsylvania and Lakeland 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 Univest Pennsylvania with a short position of Lakeland Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Univest Pennsylvania and Lakeland Bancorp.

Diversification Opportunities for Univest Pennsylvania and Lakeland Bancorp

0.81

Correlation Coefficient

Univest Pennsylvania  Lakeland Bancorp

Very poor diversification

The 3 months correlation between Univest and Lakeland is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Univest Pennsylvania and Lakeland Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland Bancorp and Univest Pennsylvania 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 Univest Pennsylvania are associated (or correlated) with Lakeland Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Bancorp has no effect on the direction of Univest Pennsylvania i.e., Univest Pennsylvania and Lakeland Bancorp go up and down completely randomly.

Pair Corralation between Univest Pennsylvania and Lakeland Bancorp

Given the investment horizon of 90 days Univest Pennsylvania is expected to generate 1.12 times less return on investment than Lakeland Bancorp. But when comparing it to its historical volatility, Univest Pennsylvania is 1.42 times less risky than Lakeland Bancorp. It trades about 0.09 of its potential returns per unit of risk. Lakeland Bancorp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,156  in Lakeland Bancorp on January 31, 2024 and sell it today you would earn a total of  83.00  from holding Lakeland Bancorp or generate 7.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Univest Pennsylvania  vs.  Lakeland Bancorp

Univest Pennsylvania

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Univest Pennsylvania are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Univest Pennsylvania is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Lakeland Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lakeland Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Lakeland Bancorp is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Univest Pennsylvania and Lakeland Bancorp

The main advantage of trading using opposite Univest Pennsylvania and Lakeland Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Univest Pennsylvania position performs unexpectedly, Lakeland 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 Lakeland Bancorp will offset losses from the drop in Lakeland Bancorp's long position.

The idea behind Univest Pennsylvania and Lakeland Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.