Correlation Between CNB Financial and Mission Valley
Can any of the company-specific risk be diversified away by investing in both CNB Financial and Mission Valley 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 Mission Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNB Financial and Mission Valley Bancorp, you can compare the effects of market volatilities on CNB Financial and Mission Valley 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 Mission Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNB Financial and Mission Valley.
Diversification Opportunities for CNB Financial and Mission Valley
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CNB and Mission is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CNB Financial and Mission Valley Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mission Valley Bancorp 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 Mission Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mission Valley Bancorp has no effect on the direction of CNB Financial i.e., CNB Financial and Mission Valley go up and down completely randomly.
Pair Corralation between CNB Financial and Mission Valley
Given the investment horizon of 90 days CNB Financial is expected to generate 1.8 times more return on investment than Mission Valley. However, CNB Financial is 1.8 times more volatile than Mission Valley Bancorp. It trades about 0.06 of its potential returns per unit of risk. Mission Valley Bancorp is currently generating about 0.09 per unit of risk. If you would invest 2,029 in CNB Financial on September 14, 2024 and sell it today you would earn a total of 698.00 from holding CNB Financial or generate 34.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CNB Financial vs. Mission Valley Bancorp
Performance |
| Timeline |
| CNB Financial |
| Mission Valley Bancorp |
CNB Financial and Mission Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNB Financial and Mission Valley
The main advantage of trading using opposite CNB Financial and Mission Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNB Financial position performs unexpectedly, Mission Valley 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 Mission Valley will offset losses from the drop in Mission Valley'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 |
| Mission Valley vs. Pacific Valley Bank | Mission Valley vs. American Business Bk | Mission Valley vs. Pinnacle Bank | Mission Valley vs. Pacific Financial Corp |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |