Correlation Between Cambridge Bancorp and Texas Capital
Can any of the company-specific risk be diversified away by investing in both Cambridge Bancorp and Texas Capital 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 Cambridge Bancorp and Texas Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambridge Bancorp and Texas Capital Bancshares, you can compare the effects of market volatilities on Cambridge Bancorp and Texas Capital 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 Cambridge Bancorp with a short position of Texas Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambridge Bancorp and Texas Capital.
Diversification Opportunities for Cambridge Bancorp and Texas Capital
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cambridge and Texas is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cambridge Bancorp and Texas Capital Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital Bancshares and Cambridge Bancorp 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 Cambridge Bancorp are associated (or correlated) with Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Bancshares has no effect on the direction of Cambridge Bancorp i.e., Cambridge Bancorp and Texas Capital go up and down completely randomly.
Pair Corralation between Cambridge Bancorp and Texas Capital
Given the investment horizon of 90 days Cambridge Bancorp is expected to generate 1.69 times more return on investment than Texas Capital. However, Cambridge Bancorp is 1.69 times more volatile than Texas Capital Bancshares. It trades about 0.07 of its potential returns per unit of risk. Texas Capital Bancshares is currently generating about 0.06 per unit of risk. If you would invest 5,904 in Cambridge Bancorp on September 14, 2024 and sell it today you would earn a total of 1,455 from holding Cambridge Bancorp or generate 24.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 60.22% |
| Values | Daily Returns |
Cambridge Bancorp vs. Texas Capital Bancshares
Performance |
| Timeline |
| Cambridge Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Texas Capital Bancshares |
Cambridge Bancorp and Texas Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambridge Bancorp and Texas Capital
The main advantage of trading using opposite Cambridge Bancorp and Texas Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambridge Bancorp position performs unexpectedly, Texas Capital 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 Texas Capital will offset losses from the drop in Texas Capital's long position.| Cambridge Bancorp vs. First Community | Cambridge Bancorp vs. Community West Bancshares | Cambridge Bancorp vs. First Financial Northwest | Cambridge Bancorp vs. First Northwest Bancorp |
| Texas Capital vs. Capital One Financial | Texas Capital vs. Capital One Financial | Texas Capital vs. Bank of America |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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