Correlation Between CB Financial and Middlefield Banc
Can any of the company-specific risk be diversified away by investing in both CB Financial and Middlefield Banc 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 CB Financial and Middlefield Banc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CB Financial Services and Middlefield Banc, you can compare the effects of market volatilities on CB Financial and Middlefield Banc 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 CB Financial with a short position of Middlefield Banc. Check out your portfolio center. Please also check ongoing floating volatility patterns of CB Financial and Middlefield Banc.
Diversification Opportunities for CB Financial and Middlefield Banc
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CBFV and Middlefield is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding CB Financial Services and Middlefield Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middlefield Banc and CB 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 CB Financial Services are associated (or correlated) with Middlefield Banc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Middlefield Banc has no effect on the direction of CB Financial i.e., CB Financial and Middlefield Banc go up and down completely randomly.
Pair Corralation between CB Financial and Middlefield Banc
Given the investment horizon of 90 days CB Financial Services is expected to generate 0.55 times more return on investment than Middlefield Banc. However, CB Financial Services is 1.82 times less risky than Middlefield Banc. It trades about 0.13 of its potential returns per unit of risk. Middlefield Banc is currently generating about 0.07 per unit of risk. If you would invest 2,701 in CB Financial Services on August 29, 2024 and sell it today you would earn a total of 389.00 from holding CB Financial Services or generate 14.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CB Financial Services vs. Middlefield Banc
Performance |
| Timeline |
| CB Financial Services |
| Middlefield Banc |
CB Financial and Middlefield Banc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CB Financial and Middlefield Banc
The main advantage of trading using opposite CB Financial and Middlefield Banc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CB Financial position performs unexpectedly, Middlefield Banc 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 Middlefield Banc will offset losses from the drop in Middlefield Banc's long position.| CB Financial vs. Home Federal Bancorp | CB Financial vs. First Northwest Bancorp | CB Financial vs. First Financial Northwest | CB Financial vs. First Capital |
| Middlefield Banc vs. Home Federal Bancorp | Middlefield Banc vs. First Northwest Bancorp | Middlefield Banc vs. First Financial Northwest | Middlefield Banc vs. First Capital |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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