Correlation Between Virginia National and Banco De

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

By analyzing existing cross correlation between Virginia National Bankshares and Banco De Chile, you can compare the effects of market volatilities on Virginia National and Banco De 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 Virginia National with a short position of Banco De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and Banco De.

Diversification Opportunities for Virginia National and Banco De

-0.55

Correlation Coefficient

Virginia National  Banco De

Excellent diversification

The 3 months correlation between Virginia and Banco is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and Banco De Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco De Chile and Virginia National 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 Virginia National Bankshares are associated (or correlated) with Banco De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco De Chile has no effect on the direction of Virginia National i.e., Virginia National and Banco De go up and down completely randomly.

Pair Corralation between Virginia National and Banco De

Given the investment horizon of 90 days Virginia National Bankshares is expected to under-perform the Banco De. In addition to that, Virginia National is 1.25 times more volatile than Banco De Chile. It trades about -0.36 of its total potential returns per unit of risk. Banco De Chile is currently generating about 0.03 per unit of volatility. If you would invest  2,203  in Banco De Chile on January 30, 2024 and sell it today you would earn a total of  17.00  from holding Banco De Chile or generate 0.77% return on investment over 90 days.

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

Virginia National Bankshares  vs.  Banco De Chile

Virginia National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virginia National Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Banco De Chile

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Banco De Chile are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Banco De may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Virginia National and Banco De

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

The idea behind Virginia National Bankshares and Banco De Chile 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.