Correlation Between Hess and Victory Bancorp

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

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

Diversification Opportunities for Hess and Victory Bancorp

-0.74

Correlation Coefficient

Hess  Victory Bancorp

Pay attention - limited upside

The 3 months correlation between Hess and Victory is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hess Corp. and The Victory Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Bancorp and Hess 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 Hess Corporation are associated (or correlated) with Victory Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Bancorp has no effect on the direction of Hess i.e., Hess and Victory Bancorp go up and down completely randomly.

Pair Corralation between Hess and Victory Bancorp

Considering the 90-day investment horizon Hess Corporation is expected to generate 0.86 times more return on investment than Victory Bancorp. However, Hess Corporation is 1.16 times less risky than Victory Bancorp. It trades about 0.21 of its potential returns per unit of risk. The Victory Bancorp is currently generating about -0.13 per unit of risk. If you would invest  15,138  in Hess Corporation on January 25, 2024 and sell it today you would earn a total of  775.00  from holding Hess Corporation or generate 5.12% return on investment over 90 days.

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

Hess Corp.  vs.  The Victory Bancorp

Hess

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hess Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Hess may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Victory Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Victory Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Hess and Victory Bancorp

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

The idea behind Hess Corporation and The Victory 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.