Correlation Between Capital Bancorp and Unity Bancorp

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

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

Diversification Opportunities for Capital Bancorp and Unity Bancorp

0.88

Correlation Coefficient

Capital Bancorp  Unity Bancorp

Very poor diversification

The 3 months correlation between Capital and Unity is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Capital Bancorp and Unity Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Bancorp and Capital Bancorp 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 Capital Bancorp 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 Capital Bancorp i.e., Capital Bancorp and Unity Bancorp go up and down completely randomly.

Pair Corralation between Capital Bancorp and Unity Bancorp

Given the investment horizon of 90 days Capital Bancorp is expected to generate 1.75 times less return on investment than Unity Bancorp. But when comparing it to its historical volatility, Capital Bancorp is 1.23 times less risky than Unity Bancorp. It trades about 0.05 of its potential returns per unit of risk. Unity Bancorp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,584  in Unity Bancorp on August 15, 2025 and sell it today you would earn a total of  2,223  from holding Unity Bancorp or generate 86.03% return on investment over 90 days.

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

Capital Bancorp  vs.  Unity Bancorp

Capital Bancorp

Risk-Adjusted Performance

Weakest

Over the last 90 days Capital Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Unity Bancorp

Risk-Adjusted Performance

Weakest

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

Pair Trading with Capital Bancorp and Unity Bancorp

The main advantage of trading using opposite Capital Bancorp and Unity Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Bancorp 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 Capital Bancorp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.