Correlation Between Lyons Bancorp and United Bancorporation
Can any of the company-specific risk be diversified away by investing in both Lyons Bancorp and United Bancorporation 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 Lyons Bancorp and United Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyons Bancorp and United Bancorporation of, you can compare the effects of market volatilities on Lyons Bancorp and United Bancorporation 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 Lyons Bancorp with a short position of United Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyons Bancorp and United Bancorporation.
Diversification Opportunities for Lyons Bancorp and United Bancorporation
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lyons and United is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lyons Bancorp and United Bancorp. of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bancorporation and Lyons 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 Lyons Bancorp are associated (or correlated) with United Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bancorporation has no effect on the direction of Lyons Bancorp i.e., Lyons Bancorp and United Bancorporation go up and down completely randomly.
Pair Corralation between Lyons Bancorp and United Bancorporation
Given the investment horizon of 90 days Lyons Bancorp is expected to generate 0.55 times more return on investment than United Bancorporation. However, Lyons Bancorp is 1.81 times less risky than United Bancorporation. It trades about -0.01 of its potential returns per unit of risk. United Bancorporation of is currently generating about -0.03 per unit of risk. If you would invest 4,080 in Lyons Bancorp on December 27, 2024 and sell it today you would lose (30.00) from holding Lyons Bancorp or give up 0.74% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lyons Bancorp vs. United Bancorp. of
Performance |
Timeline |
Lyons Bancorp |
United Bancorporation |
Lyons Bancorp and United Bancorporation Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lyons Bancorp and United Bancorporation
The main advantage of trading using opposite Lyons Bancorp and United Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyons Bancorp position performs unexpectedly, United Bancorporation 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 Bancorporation will offset losses from the drop in United Bancorporation's long position.Lyons Bancorp vs. FS Bancorp | Lyons Bancorp vs. Eastern Michigan Financial | Lyons Bancorp vs. Grand River Commerce | Lyons Bancorp vs. Bank of Botetourt |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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