Correlation Between Temecula Valley and Valley National

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

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

Diversification Opportunities for Temecula Valley and Valley National

0.0

Correlation Coefficient

Temecula Valley  Valley National

Pay attention - limited upside

The 3 months correlation between Temecula and Valley is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Temecula Valley Bancorp and Valley National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valley National Bancorp and Temecula Valley 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 Temecula Valley Bancorp are associated (or correlated) with Valley National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valley National Bancorp has no effect on the direction of Temecula Valley i.e., Temecula Valley and Valley National go up and down completely randomly.

Pair Corralation between Temecula Valley and Valley National

If you would invest  1,023  in Valley National Bancorp on October 3, 2024 and sell it today you would lose (117.00) from holding Valley National Bancorp or give up 11.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	26.67%
Values	Daily Returns

Temecula Valley Bancorp  vs.  Valley National Bancorp

Temecula Valley Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Temecula Valley Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Temecula Valley is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Valley National Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Temecula Valley and Valley National

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

The idea behind Temecula Valley Bancorp and Valley National Bancorp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.