Correlation Between American National and Central Valley
Can any of the company-specific risk be diversified away by investing in both American National and Central Valley 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 American National and Central Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American National Bankshares and Central Valley Community, you can compare the effects of market volatilities on American National and Central Valley 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 American National with a short position of Central Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of American National and Central Valley.
Diversification Opportunities for American National and Central Valley
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Central is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding American National Bankshares and Central Valley Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Valley Community and American 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 American National Bankshares are associated (or correlated) with Central Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Valley Community has no effect on the direction of American National i.e., American National and Central Valley go up and down completely randomly.
Pair Corralation between American National and Central Valley
Given the investment horizon of 90 days American National Bankshares is expected to generate 0.71 times more return on investment than Central Valley. However, American National Bankshares is 1.4 times less risky than Central Valley. It trades about -0.04 of its potential returns per unit of risk. Central Valley Community is currently generating about -0.03 per unit of risk. If you would invest 3,661 in American National Bankshares on August 30, 2024 and sell it today you would lose (501.00) from holding American National Bankshares or give up 13.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American National Bankshares vs. Central Valley Community
Performance |
| Timeline |
| American National |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Central Valley Community |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American National and Central Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American National and Central Valley
The main advantage of trading using opposite American National and Central Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American National position performs unexpectedly, Central Valley 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 Central Valley will offset losses from the drop in Central Valley's long position.| American National vs. First Northwest Bancorp | American National vs. Community West Bancshares | American National vs. First Financial Northwest | American National vs. Great Southern Bancorp |
| Central Valley vs. Home Federal Bancorp | Central Valley vs. First Northwest Bancorp | Central Valley vs. Magyar Bancorp | Central Valley vs. First United |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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