Correlation Between Virginia National and First Of

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

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

Diversification Opportunities for Virginia National and First Of

0.12

Correlation Coefficient

Virginia National  First Of

Average diversification

The 3 months correlation between Virginia and First is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and First of Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First of Long and Virginia National 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 Virginia National Bankshares are associated (or correlated) with First Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First of Long has no effect on the direction of Virginia National i.e., Virginia National and First Of go up and down completely randomly.

Pair Corralation between Virginia National and First Of

Given the investment horizon of 90 days Virginia National is expected to generate 16.05 times less return on investment than First Of. But when comparing it to its historical volatility, Virginia National Bankshares is 1.19 times less risky than First Of. It trades about 0.01 of its potential returns per unit of risk. First of Long is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,144  in First of Long on December 29, 2024 and sell it today you would earn a total of  85.00  from holding First of Long or generate 7.43% return on investment over 90 days.

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

Virginia National Bankshares  vs.  First of Long

Virginia National

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virginia National Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Virginia National is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

First of Long

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First of Long are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, First Of may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Virginia National and First Of

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

The idea behind Virginia National Bankshares and First of Long 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.