Correlation Between Virginia National and Tri County

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

Diversification Opportunities for Virginia National and Tri County

0.3

Correlation Coefficient

Virginia National  Tri County

Weak diversification

The 3 months correlation between Virginia and Tri is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and Tri County Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tri County Financial 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 Tri County. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tri County Financial has no effect on the direction of Virginia National i.e., Virginia National and Tri County go up and down completely randomly.

Pair Corralation between Virginia National and Tri County

Given the investment horizon of 90 days Virginia National is expected to generate 1.24 times less return on investment than Tri County. In addition to that, Virginia National is 1.68 times more volatile than Tri County Financial Group. It trades about 0.04 of its total potential returns per unit of risk. Tri County Financial Group is currently generating about 0.09 per unit of volatility. If you would invest  4,180  in Tri County Financial Group on September 15, 2024 and sell it today you would earn a total of  225.00  from holding Tri County Financial Group or generate 5.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Virginia National Bankshares  vs.  Tri County Financial Group

Virginia National

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virginia National Bankshares are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Tri County Financial

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tri County Financial Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Tri County is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Virginia National and Tri County

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

The idea behind Virginia National Bankshares and Tri County Financial Group 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 Global Correlations module to find global opportunities by holding instruments from different markets.