Correlation Between Cathay General and Coeur DAlene
Can any of the company-specific risk be diversified away by investing in both Cathay General and Coeur DAlene 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 Cathay General and Coeur DAlene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cathay General Bancorp and Coeur dAlene Bancorp, you can compare the effects of market volatilities on Cathay General and Coeur DAlene 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 Cathay General with a short position of Coeur DAlene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay General and Coeur DAlene.
Diversification Opportunities for Cathay General and Coeur DAlene
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cathay and Coeur is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cathay General Bancorp and Coeur dAlene Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coeur dAlene Bancorp and Cathay General 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 Cathay General Bancorp are associated (or correlated) with Coeur DAlene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coeur dAlene Bancorp has no effect on the direction of Cathay General i.e., Cathay General and Coeur DAlene go up and down completely randomly.
Pair Corralation between Cathay General and Coeur DAlene
Given the investment horizon of 90 days Cathay General is expected to generate 2.05 times less return on investment than Coeur DAlene. In addition to that, Cathay General is 1.42 times more volatile than Coeur dAlene Bancorp. It trades about 0.03 of its total potential returns per unit of risk. Coeur dAlene Bancorp is currently generating about 0.08 per unit of volatility. If you would invest 1,066 in Coeur dAlene Bancorp on October 7, 2024 and sell it today you would earn a total of 613.00 from holding Coeur dAlene Bancorp or generate 57.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.89% |
| Values | Daily Returns |
Cathay General Bancorp vs. Coeur dAlene Bancorp
Performance |
| Timeline |
| Cathay General Bancorp |
| Coeur dAlene Bancorp |
Cathay General and Coeur DAlene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay General and Coeur DAlene
The main advantage of trading using opposite Cathay General and Coeur DAlene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay General position performs unexpectedly, Coeur DAlene 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 Coeur DAlene will offset losses from the drop in Coeur DAlene's long position.| Cathay General vs. Glacier Bancorp | Cathay General vs. Capitol Federal Financial | Cathay General vs. Byline Bancorp | Cathay General vs. First Financial Bankshares |
| Coeur DAlene vs. NiSource | Coeur DAlene vs. Consol Energy | Coeur DAlene vs. Olympic Steel | Coeur DAlene vs. Cheniere Energy Partners |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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