Correlation Between ServisFirst Bancshares and Univest Pennsylvania

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

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

Diversification Opportunities for ServisFirst Bancshares and Univest Pennsylvania

0.92

Correlation Coefficient

ServisFirst Bancshares  Univest Pennsylvania

Almost no diversification

The 3 months correlation between ServisFirst and Univest is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding ServisFirst Bancshares and Univest Pennsylvania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Univest Pennsylvania and ServisFirst Bancshares 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 ServisFirst Bancshares are associated (or correlated) with Univest Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Univest Pennsylvania has no effect on the direction of ServisFirst Bancshares i.e., ServisFirst Bancshares and Univest Pennsylvania go up and down completely randomly.

Pair Corralation between ServisFirst Bancshares and Univest Pennsylvania

Given the investment horizon of 90 days ServisFirst Bancshares is expected to generate 0.99 times more return on investment than Univest Pennsylvania. However, ServisFirst Bancshares is 1.01 times less risky than Univest Pennsylvania. It trades about 0.07 of its potential returns per unit of risk. Univest Pennsylvania is currently generating about 0.07 per unit of risk. If you would invest  8,236  in ServisFirst Bancshares on October 25, 2024 and sell it today you would earn a total of  678.00  from holding ServisFirst Bancshares or generate 8.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.33%
Values	Daily Returns

ServisFirst Bancshares  vs.  Univest Pennsylvania

ServisFirst Bancshares

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ServisFirst Bancshares are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental drivers, ServisFirst Bancshares may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Univest Pennsylvania

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Univest Pennsylvania are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Univest Pennsylvania may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ServisFirst Bancshares and Univest Pennsylvania

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

The idea behind ServisFirst Bancshares and Univest Pennsylvania 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.