Correlation Between Southern California and Century Next
Can any of the company-specific risk be diversified away by investing in both Southern California and Century Next 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 Southern California and Century Next into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern California Bancorp and Century Next Financial, you can compare the effects of market volatilities on Southern California and Century Next 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 Southern California with a short position of Century Next. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern California and Century Next.
Diversification Opportunities for Southern California and Century Next
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southern and Century is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Southern California Bancorp and Century Next Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Next Financial and Southern California 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 Southern California Bancorp are associated (or correlated) with Century Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Next Financial has no effect on the direction of Southern California i.e., Southern California and Century Next go up and down completely randomly.
Pair Corralation between Southern California and Century Next
Given the investment horizon of 90 days Southern California Bancorp is expected to generate 1.74 times more return on investment than Century Next. However, Southern California is 1.74 times more volatile than Century Next Financial. It trades about 0.13 of its potential returns per unit of risk. Century Next Financial is currently generating about 0.11 per unit of risk. If you would invest 1,384 in Southern California Bancorp on August 31, 2024 and sell it today you would earn a total of 408.00 from holding Southern California Bancorp or generate 29.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Southern California Bancorp vs. Century Next Financial
Performance |
| Timeline |
| Southern California |
| Century Next Financial |
Southern California and Century Next Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern California and Century Next
The main advantage of trading using opposite Southern California and Century Next positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern California position performs unexpectedly, Century Next 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 Century Next will offset losses from the drop in Century Next's long position.| Southern California vs. Avidbank Holdings | Southern California vs. American Riviera Bank | Southern California vs. American Business Bk | Southern California vs. Private Bancorp of |
| Century Next vs. Citizens Financial Corp | Century Next vs. Triad Business Bank | Century Next vs. First Ottawa Bancshares | Century Next vs. CCSB Financial 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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