Correlation Between Virginia National and CullenFrost Bankers

Can any of the company-specific risk be diversified away by investing in both Virginia National and CullenFrost Bankers 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 CullenFrost Bankers 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 CullenFrost Bankers, you can compare the effects of market volatilities on Virginia National and CullenFrost Bankers 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 CullenFrost Bankers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and CullenFrost Bankers.

Diversification Opportunities for Virginia National and CullenFrost Bankers

-0.37

Correlation Coefficient

Virginia National  CullenFrost Bankers

Very good diversification

The 3 months correlation between Virginia and CullenFrost is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and CullenFrost Bankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CullenFrost Bankers 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 CullenFrost Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CullenFrost Bankers has no effect on the direction of Virginia National i.e., Virginia National and CullenFrost Bankers go up and down completely randomly.

Pair Corralation between Virginia National and CullenFrost Bankers

Given the investment horizon of 90 days Virginia National Bankshares is expected to generate 1.95 times more return on investment than CullenFrost Bankers. However, Virginia National is 1.95 times more volatile than CullenFrost Bankers. It trades about 0.07 of its potential returns per unit of risk. CullenFrost Bankers is currently generating about -0.13 per unit of risk. If you would invest  3,902  in Virginia National Bankshares on September 4, 2024 and sell it today you would earn a total of  272.00  from holding Virginia National Bankshares or generate 6.97% return on investment over 90 days.

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

Virginia National Bankshares  vs.  CullenFrost Bankers

Virginia National

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virginia National Bankshares are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental drivers, Virginia National may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CullenFrost Bankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CullenFrost Bankers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred 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.

Pair Trading with Virginia National and CullenFrost Bankers

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

The idea behind Virginia National Bankshares and CullenFrost Bankers 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.