Correlation Between Banc Of and VF

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

By analyzing existing cross correlation between Banc of California and VF Corporation, you can compare the effects of market volatilities on Banc Of and VF 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 Banc Of with a short position of VF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banc Of and VF.

Diversification Opportunities for Banc Of and VF

0.49

Correlation Coefficient

Banc Of  VF

Very weak diversification

The 3 months correlation between Banc and VF is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Banc of California and VF Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corporation and Banc Of 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 Banc of California are associated (or correlated) with VF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VF Corporation has no effect on the direction of Banc Of i.e., Banc Of and VF go up and down completely randomly.

Pair Corralation between Banc Of and VF

Assuming the 90 days trading horizon Banc of California is expected to generate 1.24 times more return on investment than VF. However, Banc Of is 1.24 times more volatile than VF Corporation. It trades about 0.04 of its potential returns per unit of risk. VF Corporation is currently generating about 0.0 per unit of risk. If you would invest  1,557  in Banc of California on October 11, 2024 and sell it today you would earn a total of  906.00  from holding Banc of California or generate 58.19% return on investment over 90 days.

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

Banc of California  vs.  VF Corp.

Banc of California

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banc of California are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Banc Of is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

VF Corporation

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VF Corporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, VF may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Banc Of and VF

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

The idea behind Banc of California and VF Corporation 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.