Correlation Between Liberty Northwest and United Bancorporation

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

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

Diversification Opportunities for Liberty Northwest and United Bancorporation

0.57

Correlation Coefficient

Liberty Northwest  United Bancorporation

Very weak diversification

The 3 months correlation between Liberty and United is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Northwest Bancorp and United Bancorp. of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bancorporation and Liberty Northwest 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 Liberty Northwest Bancorp are associated (or correlated) with United Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bancorporation has no effect on the direction of Liberty Northwest i.e., Liberty Northwest and United Bancorporation go up and down completely randomly.

Pair Corralation between Liberty Northwest and United Bancorporation

Given the investment horizon of 90 days Liberty Northwest Bancorp is expected to under-perform the United Bancorporation. In addition to that, Liberty Northwest is 1.27 times more volatile than United Bancorporation of. It trades about -0.23 of its total potential returns per unit of risk. United Bancorporation of is currently generating about -0.22 per unit of volatility. If you would invest  5,900  in United Bancorporation of on September 25, 2024 and sell it today you would lose (200.00) from holding United Bancorporation of or give up 3.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Liberty Northwest Bancorp  vs.  United Bancorp. of

Liberty Northwest Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Northwest Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Liberty Northwest is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

United Bancorporation

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Bancorporation of are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, United Bancorporation sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liberty Northwest and United Bancorporation

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

The idea behind Liberty Northwest Bancorp and United Bancorporation of 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.