Correlation Between CNB Financial and First United
Can any of the company-specific risk be diversified away by investing in both CNB Financial and First United 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 CNB Financial and First United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNB Financial and First United, you can compare the effects of market volatilities on CNB Financial and First United 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 CNB Financial with a short position of First United. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNB Financial and First United.
Diversification Opportunities for CNB Financial and First United
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CNB and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding CNB Financial and First United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First United and CNB 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 CNB Financial are associated (or correlated) with First United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First United has no effect on the direction of CNB Financial i.e., CNB Financial and First United go up and down completely randomly.
Pair Corralation between CNB Financial and First United
Given the investment horizon of 90 days CNB Financial is expected to generate 2.04 times less return on investment than First United. In addition to that, CNB Financial is 1.45 times more volatile than First United. It trades about 0.06 of its total potential returns per unit of risk. First United is currently generating about 0.18 per unit of volatility. If you would invest 1,775 in First United on September 14, 2024 and sell it today you would earn a total of 1,781 from holding First United or generate 100.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CNB Financial vs. First United
Performance |
| Timeline |
| CNB Financial |
| First United |
CNB Financial and First United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNB Financial and First United
The main advantage of trading using opposite CNB Financial and First United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNB Financial position performs unexpectedly, First United 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 First United will offset losses from the drop in First United's long position.| CNB Financial vs. Finward Bancorp | CNB Financial vs. Great Southern Bancorp | CNB Financial vs. First Mid Illinois | CNB Financial vs. Franklin Financial Services |
| First United vs. First Community | First United vs. Greene County Bancorp | First United vs. Community West Bancshares | First United vs. Affinity Bancshares |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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