Correlation Between UTD OV and ALERUS FINANCIAL

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

By analyzing existing cross correlation between UTD OV BK LOC ADR1 and ALERUS FINANCIAL PDL1, you can compare the effects of market volatilities on UTD OV and ALERUS 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 UTD OV with a short position of ALERUS FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of UTD OV and ALERUS FINANCIAL.

Diversification Opportunities for UTD OV and ALERUS FINANCIAL

0.88

Correlation Coefficient

UTD OV  ALERUS FINANCIAL

Very poor diversification

The 3 months correlation between UTD and ALERUS is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding UTD OV BK LOC ADR1 and ALERUS FINANCIAL PDL1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALERUS FINANCIAL PDL1 and UTD OV 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 UTD OV BK LOC ADR1 are associated (or correlated) with ALERUS FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALERUS FINANCIAL PDL1 has no effect on the direction of UTD OV i.e., UTD OV and ALERUS FINANCIAL go up and down completely randomly.

Pair Corralation between UTD OV and ALERUS FINANCIAL

Assuming the 90 days trading horizon UTD OV is expected to generate 4.57 times less return on investment than ALERUS FINANCIAL. But when comparing it to its historical volatility, UTD OV BK LOC ADR1 is 2.67 times less risky than ALERUS FINANCIAL. It trades about 0.09 of its potential returns per unit of risk. ALERUS FINANCIAL PDL1 is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,346  in ALERUS FINANCIAL PDL1 on April 23, 2025 and sell it today you would earn a total of  404.00  from holding ALERUS FINANCIAL PDL1 or generate 30.01% return on investment over 90 days.

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

UTD OV BK LOC ADR1  vs.  ALERUS FINANCIAL PDL1

UTD OV BK

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UTD OV BK LOC ADR1 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, UTD OV may actually be approaching a critical reversion point that can send shares even higher in August 2025.

ALERUS FINANCIAL PDL1

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ALERUS FINANCIAL PDL1 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ALERUS FINANCIAL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UTD OV and ALERUS FINANCIAL

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

The idea behind UTD OV BK LOC ADR1 and ALERUS FINANCIAL PDL1 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.