Correlation Between VersaBank and Hampton Financial
Can any of the company-specific risk be diversified away by investing in both VersaBank and Hampton 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 VersaBank and Hampton Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and Hampton Financial Corp, you can compare the effects of market volatilities on VersaBank and Hampton 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 VersaBank with a short position of Hampton Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and Hampton Financial.
Diversification Opportunities for VersaBank and Hampton Financial
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VersaBank and Hampton is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and Hampton Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hampton Financial Corp and VersaBank 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 VersaBank are associated (or correlated) with Hampton Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hampton Financial Corp has no effect on the direction of VersaBank i.e., VersaBank and Hampton Financial go up and down completely randomly.
Pair Corralation between VersaBank and Hampton Financial
Assuming the 90 days trading horizon VersaBank is expected to under-perform the Hampton Financial. In addition to that, VersaBank is 1.23 times more volatile than Hampton Financial Corp. It trades about -0.03 of its total potential returns per unit of risk. Hampton Financial Corp is currently generating about 0.03 per unit of volatility. If you would invest 44.00 in Hampton Financial Corp on September 25, 2024 and sell it today you would earn a total of 1.00 from holding Hampton Financial Corp or generate 2.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
VersaBank vs. Hampton Financial Corp
Performance |
Timeline |
VersaBank |
Hampton Financial Corp |
VersaBank and Hampton Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with VersaBank and Hampton Financial
The main advantage of trading using opposite VersaBank and Hampton Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, Hampton 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 Hampton Financial will offset losses from the drop in Hampton Financial's long position.VersaBank vs. Canadian Western Bank | VersaBank vs. National Bank of | VersaBank vs. Canadian Imperial Bank | VersaBank vs. Great West Lifeco |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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