Correlation Between Auburn National and CF Bankshares
Can any of the company-specific risk be diversified away by investing in both Auburn National and CF Bankshares 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 Auburn National and CF Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auburn National Bancorporation and CF Bankshares, you can compare the effects of market volatilities on Auburn National and CF Bankshares 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 Auburn National with a short position of CF Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auburn National and CF Bankshares.
Diversification Opportunities for Auburn National and CF Bankshares
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Auburn and CFBK is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Auburn National Bancorp. and CF Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Bankshares and Auburn 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 Auburn National Bancorporation are associated (or correlated) with CF Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Bankshares has no effect on the direction of Auburn National i.e., Auburn National and CF Bankshares go up and down completely randomly.
Pair Corralation between Auburn National and CF Bankshares
Given the investment horizon of 90 days Auburn National is expected to generate 2.01 times less return on investment than CF Bankshares. But when comparing it to its historical volatility, Auburn National Bancorporation is 1.4 times less risky than CF Bankshares. It trades about 0.14 of its potential returns per unit of risk. CF Bankshares is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,538 in CF Bankshares on September 1, 2024 and sell it today you would earn a total of 284.00 from holding CF Bankshares or generate 11.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auburn National Bancorp. vs. CF Bankshares
Performance |
| Timeline |
| Auburn National Banc |
| CF Bankshares |
Auburn National and CF Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auburn National and CF Bankshares
The main advantage of trading using opposite Auburn National and CF Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auburn National position performs unexpectedly, CF Bankshares 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 CF Bankshares will offset losses from the drop in CF Bankshares' long position.| Auburn National vs. Home Federal Bancorp | Auburn National vs. LINKBANCORP | Auburn National vs. Affinity Bancshares | Auburn National vs. Southern California Bancorp |
| CF Bankshares vs. Affinity Bancshares | CF Bankshares vs. Southern California Bancorp | CF Bankshares vs. Auburn National Bancorporation | CF Bankshares vs. BayCom Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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