Correlation Between Plumas Bancorp and United Security

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

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

Diversification Opportunities for Plumas Bancorp and United Security

0.54

Correlation Coefficient

Plumas Bancorp  United Security

Very weak diversification

The 3 months correlation between Plumas and United is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Plumas Bancorp and United Security Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Security Banc and Plumas 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 Plumas Bancorp are associated (or correlated) with United Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Security Banc has no effect on the direction of Plumas Bancorp i.e., Plumas Bancorp and United Security go up and down completely randomly.

Pair Corralation between Plumas Bancorp and United Security

Given the investment horizon of 90 days Plumas Bancorp is expected to under-perform the United Security. In addition to that, Plumas Bancorp is 1.16 times more volatile than United Security Bancshares. It trades about -0.04 of its total potential returns per unit of risk. United Security Bancshares is currently generating about -0.03 per unit of volatility. If you would invest  886.00  in United Security Bancshares on May 7, 2025 and sell it today you would lose (38.00) from holding United Security Bancshares or give up 4.29% of portfolio value over 90 days.

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

Plumas Bancorp  vs.  United Security Bancshares

Plumas Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Plumas Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Plumas Bancorp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

United Security Banc

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Security Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, United Security is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Plumas Bancorp and United Security

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

The idea behind Plumas Bancorp and United Security Bancshares 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.