Correlation Between Village Bank and Valley National

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

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

Diversification Opportunities for Village Bank and Valley National

-0.19

Correlation Coefficient

Village Bank  Valley National

Good diversification

The 3 months correlation between Village and Valley is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Village Bank and and Valley National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valley National Bancorp and Village Bank 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 Village Bank and are associated (or correlated) with Valley National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valley National Bancorp has no effect on the direction of Village Bank i.e., Village Bank and Valley National go up and down completely randomly.

Pair Corralation between Village Bank and Valley National

Given the investment horizon of 90 days Village Bank and is expected to generate 0.19 times more return on investment than Valley National. However, Village Bank and is 5.2 times less risky than Valley National. It trades about 0.31 of its potential returns per unit of risk. Valley National Bancorp is currently generating about 0.01 per unit of risk. If you would invest  4,126  in Village Bank and on February 7, 2024 and sell it today you would earn a total of  140.00  from holding Village Bank and or generate 3.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.82%
Values	Daily Returns

Village Bank and  vs.  Valley National Bancorp

Village Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Village Bank and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Village Bank is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Valley National Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valley National Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Valley National is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Village Bank and Valley National

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

The idea behind Village Bank and and Valley National 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.