Correlation Between VersaBank and AmeriServ Financial

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

By analyzing existing cross correlation between VersaBank and AmeriServ Financial, you can compare the effects of market volatilities on VersaBank and AmeriServ 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 AmeriServ Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and AmeriServ Financial.

Diversification Opportunities for VersaBank and AmeriServ Financial

-0.37

Correlation Coefficient

VersaBank  AmeriServ Financial

Very good diversification

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

Pair Corralation between VersaBank and AmeriServ Financial

Given the investment horizon of 90 days VersaBank is expected to generate 0.91 times more return on investment than AmeriServ Financial. However, VersaBank is 1.09 times less risky than AmeriServ Financial. It trades about 0.16 of its potential returns per unit of risk. AmeriServ Financial is currently generating about -0.09 per unit of risk. If you would invest  963.00  in VersaBank on March 29, 2024 and sell it today you would earn a total of  95.00  from holding VersaBank or generate 9.87% return on investment over 90 days.

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

VersaBank  vs.  AmeriServ Financial

VersaBank

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VersaBank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, VersaBank is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

AmeriServ Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AmeriServ Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, AmeriServ Financial may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with VersaBank and AmeriServ Financial

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

The idea behind VersaBank and AmeriServ Financial 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.