Correlation Between Virginia National and BankUnited
Can any of the company-specific risk be diversified away by investing in both Virginia National and BankUnited 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 BankUnited 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 BankUnited, you can compare the effects of market volatilities on Virginia National and BankUnited 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 BankUnited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and BankUnited.
Diversification Opportunities for Virginia National and BankUnited
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Virginia and BankUnited is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and BankUnited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankUnited 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 BankUnited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankUnited has no effect on the direction of Virginia National i.e., Virginia National and BankUnited go up and down completely randomly.
Pair Corralation between Virginia National and BankUnited
Given the investment horizon of 90 days Virginia National Bankshares is expected to under-perform the BankUnited. But the stock apears to be less risky and, when comparing its historical volatility, Virginia National Bankshares is 1.03 times less risky than BankUnited. The stock trades about -0.02 of its potential returns per unit of risk. The BankUnited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,526 in BankUnited on February 2, 2024 and sell it today you would earn a total of 271.00 from holding BankUnited or generate 10.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Virginia National Bankshares vs. BankUnited
Performance |
Timeline |
Virginia National |
BankUnited |
Virginia National and BankUnited Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Virginia National and BankUnited
The main advantage of trading using opposite Virginia National and BankUnited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia National position performs unexpectedly, BankUnited 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 BankUnited will offset losses from the drop in BankUnited's long position.Virginia National vs. Finward Bancorp | Virginia National vs. Community West Bancshares | Virginia National vs. First Financial Northwest | Virginia National vs. Oak Valley Bancorp |
BankUnited vs. International Bancshares | BankUnited vs. Hilltop Holdings | BankUnited vs. FB Financial Corp | BankUnited vs. Red River Bancshares |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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