Correlation Between Bank Of Princeton and Unity Bancorp

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

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

Diversification Opportunities for Bank Of Princeton and Unity Bancorp

0.68

Correlation Coefficient

Bank Of Princeton  Unity Bancorp

Poor diversification

The 3 months correlation between Bank and Unity is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of Princeton and Unity Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Bancorp and Bank Of Princeton 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 Bank Of Princeton are associated (or correlated) with Unity Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Bancorp has no effect on the direction of Bank Of Princeton i.e., Bank Of Princeton and Unity Bancorp go up and down completely randomly.

Pair Corralation between Bank Of Princeton and Unity Bancorp

Given the investment horizon of 90 days Bank Of Princeton is expected to generate 3.28 times less return on investment than Unity Bancorp. But when comparing it to its historical volatility, Bank Of Princeton is 1.12 times less risky than Unity Bancorp. It trades about 0.06 of its potential returns per unit of risk. Unity Bancorp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4,165  in Unity Bancorp on May 1, 2025 and sell it today you would earn a total of  898.00  from holding Unity Bancorp or generate 21.56% return on investment over 90 days.

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

Bank Of Princeton  vs.  Unity Bancorp

Bank Of Princeton

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Of Princeton are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Bank Of Princeton may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Unity Bancorp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Bancorp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Unity Bancorp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Of Princeton and Unity Bancorp

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

The idea behind Bank Of Princeton and Unity 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.