Correlation Between Atlantic Union and Waterstone Financial

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

By analyzing existing cross correlation between Atlantic Union Bankshares and Waterstone Financial, you can compare the effects of market volatilities on Atlantic Union and Waterstone Financial 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 Atlantic Union with a short position of Waterstone Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlantic Union and Waterstone Financial.

Diversification Opportunities for Atlantic Union and Waterstone Financial

0.73

Correlation Coefficient

Atlantic Union  Waterstone Financial

Poor diversification

The 3 months correlation between Atlantic and Waterstone is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Atlantic Union Bankshares and Waterstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waterstone Financial and Atlantic Union 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 Atlantic Union Bankshares are associated (or correlated) with Waterstone Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waterstone Financial has no effect on the direction of Atlantic Union i.e., Atlantic Union and Waterstone Financial go up and down completely randomly.

Pair Corralation between Atlantic Union and Waterstone Financial

Considering the 90-day investment horizon Atlantic Union Bankshares is expected to generate 1.11 times more return on investment than Waterstone Financial. However, Atlantic Union is 1.11 times more volatile than Waterstone Financial. It trades about 0.11 of its potential returns per unit of risk. Waterstone Financial is currently generating about 0.08 per unit of risk. If you would invest  3,650  in Atlantic Union Bankshares on August 15, 2024 and sell it today you would earn a total of  623.00  from holding Atlantic Union Bankshares or generate 17.07% return on investment over 90 days.

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

Atlantic Union Bankshares  vs.  Waterstone Financial

Atlantic Union Bankshares

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantic Union Bankshares are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Atlantic Union sustained solid returns over the last few months and may actually be approaching a breakup point.

Waterstone Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Waterstone Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental drivers, Waterstone Financial may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Atlantic Union and Waterstone Financial

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

The idea behind Atlantic Union Bankshares and Waterstone Financial 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.