Correlation Between United Community and Mid Penn

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

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

Diversification Opportunities for United Community and Mid Penn

-0.27

Correlation Coefficient

United Community  Mid Penn

Very good diversification

The 3 months correlation between United and Mid is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding United Community Banks and Mid Penn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Penn Bancorp and United Community 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 Community Banks are associated (or correlated) with Mid Penn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Penn Bancorp has no effect on the direction of United Community i.e., United Community and Mid Penn go up and down completely randomly.

Pair Corralation between United Community and Mid Penn

If you would invest (100.00) in United Community Banks on October 25, 2024 and sell it today you would earn a total of  100.00  from holding United Community Banks or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

United Community Banks  vs.  Mid Penn Bancorp

United Community Banks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Community Banks has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, United Community is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Mid Penn Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with United Community and Mid Penn

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

The idea behind United Community Banks and Mid Penn 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.