Correlation Between Security Federal and United Bancorporation

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

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

Diversification Opportunities for Security Federal and United Bancorporation

-0.35

Correlation Coefficient

Security Federal  United Bancorporation

Very good diversification

The 3 months correlation between Security and United is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Security Federal and United Bancorp. of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bancorporation and Security Federal 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 Security Federal 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 Security Federal i.e., Security Federal and United Bancorporation go up and down completely randomly.

Pair Corralation between Security Federal and United Bancorporation

Given the investment horizon of 90 days Security Federal is expected to generate 1.1 times more return on investment than United Bancorporation. However, Security Federal is 1.1 times more volatile than United Bancorporation of. It trades about 0.11 of its potential returns per unit of risk. United Bancorporation of is currently generating about -0.06 per unit of risk. If you would invest  2,701  in Security Federal on December 29, 2024 and sell it today you would earn a total of  269.00  from holding Security Federal or generate 9.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Security Federal  vs.  United Bancorp. of

Security Federal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Security Federal are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Security Federal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

United Bancorporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Bancorporation of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, United Bancorporation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Security Federal and United Bancorporation

The main advantage of trading using opposite Security Federal and United Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Security Federal 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.

The idea behind Security Federal and United Bancorporation of 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.