Correlation Between Veritex Holdings and Kentucky First

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

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

Diversification Opportunities for Veritex Holdings and Kentucky First

-0.4

Correlation Coefficient

Veritex Holdings  Kentucky First

Very good diversification

The 3 months correlation between Veritex and Kentucky is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Veritex Holdings and Kentucky First Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentucky First Federal 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 Kentucky First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kentucky First Federal has no effect on the direction of Veritex Holdings i.e., Veritex Holdings and Kentucky First go up and down completely randomly.

Pair Corralation between Veritex Holdings and Kentucky First

Given the investment horizon of 90 days Veritex Holdings is expected to generate 0.67 times more return on investment than Kentucky First. However, Veritex Holdings is 1.49 times less risky than Kentucky First. It trades about 0.15 of its potential returns per unit of risk. Kentucky First Federal is currently generating about 0.03 per unit of risk. If you would invest  2,398  in Veritex Holdings on September 12, 2024 and sell it today you would earn a total of  570.00  from holding Veritex Holdings or generate 23.77% return on investment over 90 days.

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

Veritex Holdings  vs.  Kentucky First Federal

Veritex Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Veritex Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Veritex Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Kentucky First Federal

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kentucky First Federal are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Kentucky First is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Veritex Holdings and Kentucky First

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

The idea behind Veritex Holdings and Kentucky First Federal 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.