Correlation Between Veritex Holdings and Heartland Financial

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

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

Diversification Opportunities for Veritex Holdings and Heartland Financial

-0.17

Correlation Coefficient

Veritex Holdings  Heartland Financial

Good diversification

The 3 months correlation between Veritex and Heartland is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Veritex Holdings and Heartland Financial USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Financial USA and Veritex Holdings 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 Veritex Holdings are associated (or correlated) with Heartland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Financial USA has no effect on the direction of Veritex Holdings i.e., Veritex Holdings and Heartland Financial go up and down completely randomly.

Pair Corralation between Veritex Holdings and Heartland Financial

Given the investment horizon of 90 days Veritex Holdings is expected to under-perform the Heartland Financial. In addition to that, Veritex Holdings is 1.18 times more volatile than Heartland Financial USA. It trades about -0.08 of its total potential returns per unit of risk. Heartland Financial USA is currently generating about 0.17 per unit of volatility. If you would invest  6,106  in Heartland Financial USA on December 30, 2024 and sell it today you would earn a total of  361.00  from holding Heartland Financial USA or generate 5.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	37.1%
Values	Daily Returns

Veritex Holdings  vs.  Heartland Financial USA

Veritex Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Veritex Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Heartland Financial USA

Risk-Adjusted Performance

Good

Over the last 90 days Heartland Financial USA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak essential indicators, Heartland Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Veritex Holdings and Heartland Financial

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

The idea behind Veritex Holdings and Heartland Financial USA 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 Anywhere module to track or share privately all of your investments from the convenience of any device.