Correlation Between CVB Financial and British American
Can any of the company-specific risk be diversified away by investing in both CVB Financial and British American 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 CVB Financial and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVB Financial Corp and British American Tobacco, you can compare the effects of market volatilities on CVB Financial and British American 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 CVB Financial with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVB Financial and British American.
Diversification Opportunities for CVB Financial and British American
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CVB and British is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial Corp and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and CVB Financial 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 CVB Financial Corp are associated (or correlated) with British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of CVB Financial i.e., CVB Financial and British American go up and down completely randomly.
Pair Corralation between CVB Financial and British American
Assuming the 90 days horizon CVB Financial Corp is expected to under-perform the British American. In addition to that, CVB Financial is 2.39 times more volatile than British American Tobacco. It trades about -0.19 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.04 per unit of volatility. If you would invest 3,537 in British American Tobacco on October 11, 2024 and sell it today you would earn a total of 20.00 from holding British American Tobacco or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVB Financial Corp vs. British American Tobacco
Performance |
| Timeline |
| CVB Financial Corp |
| British American Tobacco |
CVB Financial and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVB Financial and British American
The main advantage of trading using opposite CVB Financial and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVB Financial position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| CVB Financial vs. FIREWEED METALS P | CVB Financial vs. LG Display Co | CVB Financial vs. GREENX METALS LTD | CVB Financial vs. Commercial Vehicle Group |
| British American vs. JSC Halyk bank | British American vs. Cal Maine Foods | British American vs. Discover Financial Services | British American vs. CVB 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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