Correlation Between Banc Of and CF Financial
Can any of the company-specific risk be diversified away by investing in both Banc Of and CF 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 Banc Of and CF Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banc of California and CF Financial, you can compare the effects of market volatilities on Banc Of and CF 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 Banc Of with a short position of CF Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banc Of and CF Financial.
Diversification Opportunities for Banc Of and CF Financial
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banc and CFFI is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Banc of California and CF Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Financial and Banc Of 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 Banc of California are associated (or correlated) with CF Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Financial has no effect on the direction of Banc Of i.e., Banc Of and CF Financial go up and down completely randomly.
Pair Corralation between Banc Of and CF Financial
Assuming the 90 days trading horizon Banc of California is expected to generate 1.9 times more return on investment than CF Financial. However, Banc Of is 1.9 times more volatile than CF Financial. It trades about 0.06 of its potential returns per unit of risk. CF Financial is currently generating about 0.04 per unit of risk. If you would invest 1,162 in Banc of California on September 1, 2024 and sell it today you would earn a total of 1,338 from holding Banc of California or generate 115.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banc of California vs. CF Financial
Performance |
| Timeline |
| Banc of California |
| CF Financial |
Banc Of and CF Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banc Of and CF Financial
The main advantage of trading using opposite Banc Of and CF Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banc Of position performs unexpectedly, CF 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 CF Financial will offset losses from the drop in CF Financial's long position.| Banc Of vs. SunOpta | Banc Of vs. BBB Foods | Banc Of vs. Broadstone Net Lease | Banc Of vs. FitLife Brands, Common |
| CF Financial vs. Home Federal Bancorp | CF Financial vs. First Financial Northwest | CF Financial vs. First Northwest Bancorp | CF Financial vs. First Capital |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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