Correlation Between Unity Bancorp and United Guardian

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

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

Diversification Opportunities for Unity Bancorp and United Guardian

0.53

Correlation Coefficient

Unity Bancorp  United Guardian

Very weak diversification

The 3 months correlation between Unity and United is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Unity Bancorp and United Guardian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Guardian 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 United Guardian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Guardian has no effect on the direction of Unity Bancorp i.e., Unity Bancorp and United Guardian go up and down completely randomly.

Pair Corralation between Unity Bancorp and United Guardian

Given the investment horizon of 90 days Unity Bancorp is expected to generate 0.79 times more return on investment than United Guardian. However, Unity Bancorp is 1.26 times less risky than United Guardian. It trades about 0.09 of its potential returns per unit of risk. United Guardian is currently generating about 0.04 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	Weak
Accuracy	100.0%
Values	Daily Returns

Unity Bancorp  vs.  United Guardian

Unity Bancorp

Risk-Adjusted Performance

OK

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.

United Guardian

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United Guardian are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, United Guardian is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Unity Bancorp and United Guardian

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

The idea behind Unity Bancorp and United Guardian 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.