Correlation Between Cathay General and Pioneer Bankcorp
Can any of the company-specific risk be diversified away by investing in both Cathay General and Pioneer Bankcorp 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 Pioneer Bankcorp 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 Pioneer Bankcorp, you can compare the effects of market volatilities on Cathay General and Pioneer Bankcorp 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 Pioneer Bankcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay General and Pioneer Bankcorp.
Diversification Opportunities for Cathay General and Pioneer Bankcorp
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cathay and Pioneer is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cathay General Bancorp and Pioneer Bankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Bankcorp 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 Pioneer Bankcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Bankcorp has no effect on the direction of Cathay General i.e., Cathay General and Pioneer Bankcorp go up and down completely randomly.
Pair Corralation between Cathay General and Pioneer Bankcorp
Given the investment horizon of 90 days Cathay General Bancorp is expected to generate 1.98 times more return on investment than Pioneer Bankcorp. However, Cathay General is 1.98 times more volatile than Pioneer Bankcorp. It trades about 0.03 of its potential returns per unit of risk. Pioneer Bankcorp is currently generating about 0.05 per unit of risk. If you would invest 3,983 in Cathay General Bancorp on October 7, 2024 and sell it today you would earn a total of 771.00 from holding Cathay General Bancorp or generate 19.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Cathay General Bancorp vs. Pioneer Bankcorp
Performance |
| Timeline |
| Cathay General Bancorp |
| Pioneer Bankcorp |
Cathay General and Pioneer Bankcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay General and Pioneer Bankcorp
The main advantage of trading using opposite Cathay General and Pioneer Bankcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay General position performs unexpectedly, Pioneer Bankcorp 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 Pioneer Bankcorp will offset losses from the drop in Pioneer Bankcorp'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 |
| Pioneer Bankcorp vs. FineMark Holdings | Pioneer Bankcorp vs. Oxford Bank | Pioneer Bankcorp vs. Prime Meridian Holding | Pioneer Bankcorp vs. Oconee Financial |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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