Correlation Between Veritex Holdings and IF Bancorp

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

By analyzing existing cross correlation between Veritex Holdings and IF Bancorp, you can compare the effects of market volatilities on Veritex Holdings and IF Bancorp 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 IF Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veritex Holdings and IF Bancorp.

Diversification Opportunities for Veritex Holdings and IF Bancorp

0.7

Correlation Coefficient

Veritex Holdings  IF Bancorp

Poor diversification

The 3 months correlation between Veritex and IROQ is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Veritex Holdings and IF Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IF Bancorp 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 IF Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IF Bancorp has no effect on the direction of Veritex Holdings i.e., Veritex Holdings and IF Bancorp go up and down completely randomly.

Pair Corralation between Veritex Holdings and IF Bancorp

Given the investment horizon of 90 days Veritex Holdings is expected to generate 1.85 times less return on investment than IF Bancorp. In addition to that, Veritex Holdings is 1.26 times more volatile than IF Bancorp. It trades about 0.02 of its total potential returns per unit of risk. IF Bancorp is currently generating about 0.04 per unit of volatility. If you would invest  1,696  in IF Bancorp on September 25, 2024 and sell it today you would earn a total of  634.00  from holding IF Bancorp or generate 37.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	92.54%
Values	Daily Returns

Veritex Holdings  vs.  IF Bancorp

Veritex Holdings

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Veritex Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Veritex Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

IF Bancorp

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IF Bancorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, IF Bancorp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Veritex Holdings and IF Bancorp

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

The idea behind Veritex Holdings and IF 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..