Correlation Between United Bankshares and Capitol Federal

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

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

Diversification Opportunities for United Bankshares and Capitol Federal

0.88

Correlation Coefficient

United Bankshares  Capitol Federal

Very poor diversification

The 3 months correlation between United and Capitol is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding United Bankshares and Capitol Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Federal Financial and United Bankshares 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 United Bankshares are associated (or correlated) with Capitol Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Federal Financial has no effect on the direction of United Bankshares i.e., United Bankshares and Capitol Federal go up and down completely randomly.

Pair Corralation between United Bankshares and Capitol Federal

Given the investment horizon of 90 days United Bankshares is expected to generate 0.99 times more return on investment than Capitol Federal. However, United Bankshares is 1.01 times less risky than Capitol Federal. It trades about -0.38 of its potential returns per unit of risk. Capitol Federal Financial is currently generating about -0.45 per unit of risk. If you would invest  4,156  in United Bankshares on October 5, 2024 and sell it today you would lose (452.00) from holding United Bankshares or give up 10.88% of portfolio value over 90 days.

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

United Bankshares  vs.  Capitol Federal Financial

United Bankshares

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United Bankshares are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, United Bankshares is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Capitol Federal Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Federal Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Capitol Federal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with United Bankshares and Capitol Federal

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

The idea behind United Bankshares and Capitol Federal Financial 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.