Correlation Between United Bankshares and Trustmark
Can any of the company-specific risk be diversified away by investing in both United Bankshares and Trustmark 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 Trustmark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Bankshares and Trustmark, you can compare the effects of market volatilities on United Bankshares and Trustmark 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 Trustmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bankshares and Trustmark.
Diversification Opportunities for United Bankshares and Trustmark
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Trustmark is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding United Bankshares and Trustmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trustmark 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 Trustmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trustmark has no effect on the direction of United Bankshares i.e., United Bankshares and Trustmark go up and down completely randomly.
Pair Corralation between United Bankshares and Trustmark
Given the investment horizon of 90 days United Bankshares is expected to under-perform the Trustmark. But the stock apears to be less risky and, when comparing its historical volatility, United Bankshares is 1.08 times less risky than Trustmark. The stock trades about -0.16 of its potential returns per unit of risk. The Trustmark is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 3,779 in Trustmark on December 5, 2024 and sell it today you would lose (251.00) from holding Trustmark or give up 6.64% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
United Bankshares vs. Trustmark
Performance |
Timeline |
United Bankshares |
Trustmark |
United Bankshares and Trustmark Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Bankshares and Trustmark
The main advantage of trading using opposite United Bankshares and Trustmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bankshares position performs unexpectedly, Trustmark 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 Trustmark will offset losses from the drop in Trustmark's long position.United Bankshares vs. Peoples Bancorp | United Bankshares vs. Eagle Bancorp | United Bankshares vs. Northrim BanCorp | United Bankshares vs. Pacific Premier Bancorp |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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