Correlation Between Unity Bancorp and Orrstown Financial

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

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

Diversification Opportunities for Unity Bancorp and Orrstown Financial

0.94

Correlation Coefficient

Unity Bancorp  Orrstown Financial

Almost no diversification

The 3 months correlation between Unity and Orrstown is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Unity Bancorp and Orrstown Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orrstown Financial and Unity 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 Unity Bancorp are associated (or correlated) with Orrstown Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orrstown Financial has no effect on the direction of Unity Bancorp i.e., Unity Bancorp and Orrstown Financial go up and down completely randomly.

Pair Corralation between Unity Bancorp and Orrstown Financial

Given the investment horizon of 90 days Unity Bancorp is expected to generate 1.15 times more return on investment than Orrstown Financial. However, Unity Bancorp is 1.15 times more volatile than Orrstown Financial Services. It trades about 0.09 of its potential returns per unit of risk. Orrstown Financial Services is currently generating about 0.09 per unit of risk. If you would invest  4,335  in Unity Bancorp on May 6, 2025 and sell it today you would earn a total of  450.00  from holding Unity Bancorp or generate 10.38% return on investment over 90 days.

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

Unity Bancorp  vs.  Orrstown Financial Services

Unity Bancorp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Unity Bancorp may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Orrstown Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Orrstown Financial Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Orrstown Financial may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Unity Bancorp and Orrstown Financial

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

The idea behind Unity Bancorp and Orrstown Financial Services 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.