Correlation Between United Security and Magyar Bancorp

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

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

Diversification Opportunities for United Security and Magyar Bancorp

-0.01

Correlation Coefficient

United Security  Magyar Bancorp

Good diversification

The 3 months correlation between United and Magyar is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding United Security Bancshares and Magyar Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Bancorp and United Security 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 United Security Bancshares are associated (or correlated) with Magyar Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Bancorp has no effect on the direction of United Security i.e., United Security and Magyar Bancorp go up and down completely randomly.

Pair Corralation between United Security and Magyar Bancorp

Given the investment horizon of 90 days United Security Bancshares is expected to under-perform the Magyar Bancorp. In addition to that, United Security is 1.34 times more volatile than Magyar Bancorp. It trades about -0.05 of its total potential returns per unit of risk. Magyar Bancorp is currently generating about 0.24 per unit of volatility. If you would invest  1,434  in Magyar Bancorp on May 7, 2025 and sell it today you would earn a total of  284.00  from holding Magyar Bancorp or generate 19.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

United Security Bancshares  vs.  Magyar Bancorp

United Security Banc

Risk-Adjusted Performance

Weakest

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.

Magyar Bancorp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Magyar Bancorp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Magyar Bancorp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Security and Magyar Bancorp

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

The idea behind United Security Bancshares and Magyar 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.