Correlation Between CBH and North American
Can any of the company-specific risk be diversified away by investing in both CBH and North American 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 CBH and North American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CBH and North American Financial, you can compare the effects of market volatilities on CBH and North American 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 CBH with a short position of North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBH and North American.
Diversification Opportunities for CBH and North American
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CBH and North is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding CBH and North American Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Financial and CBH 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 CBH are associated (or correlated) with North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Financial has no effect on the direction of CBH i.e., CBH and North American go up and down completely randomly.
Pair Corralation between CBH and North American
If you would invest 475.00 in North American Financial on October 21, 2024 and sell it today you would earn a total of 20.00 from holding North American Financial or generate 4.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
CBH vs. North American Financial
Performance |
| Timeline |
| CBH |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| North American Financial |
CBH and North American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CBH and North American
The main advantage of trading using opposite CBH and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBH position performs unexpectedly, North American 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 North American will offset losses from the drop in North American's long position.| CBH vs. Eaton Vance National | CBH vs. Blackrock Muniholdings Ny | CBH vs. Nuveen California Select | CBH vs. MFS Investment Grade |
| North American vs. Financial 15 Split | North American vs. Clough Global Ef | North American vs. Morgan Stanley India | North American vs. SEI Investments |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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