Correlation Between FVCBankcorp and Virginia National

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

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

Diversification Opportunities for FVCBankcorp and Virginia National

0.56

Correlation Coefficient

FVCBankcorp  Virginia National

Very weak diversification

The 3 months correlation between FVCBankcorp and Virginia is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding FVCBankcorp and Virginia National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virginia National and FVCBankcorp 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 FVCBankcorp are associated (or correlated) with Virginia National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virginia National has no effect on the direction of FVCBankcorp i.e., FVCBankcorp and Virginia National go up and down completely randomly.

Pair Corralation between FVCBankcorp and Virginia National

Given the investment horizon of 90 days FVCBankcorp is expected to generate 0.91 times more return on investment than Virginia National. However, FVCBankcorp is 1.1 times less risky than Virginia National. It trades about 0.13 of its potential returns per unit of risk. Virginia National Bankshares is currently generating about 0.05 per unit of risk. If you would invest  1,137  in FVCBankcorp on May 1, 2025 and sell it today you would earn a total of  149.00  from holding FVCBankcorp or generate 13.1% return on investment over 90 days.

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

FVCBankcorp  vs.  Virginia National Bankshares

FVCBankcorp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FVCBankcorp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, FVCBankcorp sustained solid returns over the last few months and may actually be approaching a breakup point.

Virginia National

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virginia National Bankshares are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Virginia National is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with FVCBankcorp and Virginia National

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

The idea behind FVCBankcorp and Virginia National Bankshares 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..