Correlation Between CVB Financial and Luckin Coffee
Can any of the company-specific risk be diversified away by investing in both CVB Financial and Luckin Coffee 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 Luckin Coffee 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 Luckin Coffee, you can compare the effects of market volatilities on CVB Financial and Luckin Coffee 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 Luckin Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVB Financial and Luckin Coffee.
Diversification Opportunities for CVB Financial and Luckin Coffee
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVB and Luckin is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial Corp and Luckin Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luckin Coffee 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 Luckin Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luckin Coffee has no effect on the direction of CVB Financial i.e., CVB Financial and Luckin Coffee go up and down completely randomly.
Pair Corralation between CVB Financial and Luckin Coffee
Assuming the 90 days horizon CVB Financial is expected to generate 5.38 times less return on investment than Luckin Coffee. But when comparing it to its historical volatility, CVB Financial Corp is 1.62 times less risky than Luckin Coffee. It trades about 0.01 of its potential returns per unit of risk. Luckin Coffee is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,716 in Luckin Coffee on October 28, 2024 and sell it today you would lose (156.00) from holding Luckin Coffee or give up 5.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVB Financial Corp vs. Luckin Coffee
Performance |
| Timeline |
| CVB Financial Corp |
| Luckin Coffee |
CVB Financial and Luckin Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVB Financial and Luckin Coffee
The main advantage of trading using opposite CVB Financial and Luckin Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVB Financial position performs unexpectedly, Luckin Coffee 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 Luckin Coffee will offset losses from the drop in Luckin Coffee's long position.| CVB Financial vs. POSBO UNSPADRS20YC1 | CVB Financial vs. Postal Savings Bank | CVB Financial vs. Truist Financial | CVB Financial vs. OVERSEA CHINUNSPADR2 |
| Luckin Coffee vs. Global Ship Lease | Luckin Coffee vs. DETALION GAMES SA | Luckin Coffee vs. IMPERIAL TOBACCO | Luckin Coffee vs. GAMESTOP |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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