Correlation Between CNB Financial and Southern Banc
Can any of the company-specific risk be diversified away by investing in both CNB Financial and Southern 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 CNB Financial and Southern Banc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNB Financial and Southern Banc, you can compare the effects of market volatilities on CNB Financial and Southern 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 CNB Financial with a short position of Southern Banc. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNB Financial and Southern Banc.
Diversification Opportunities for CNB Financial and Southern Banc
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between CNB and Southern is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CNB Financial and Southern Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Banc 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 Southern Banc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Banc has no effect on the direction of CNB Financial i.e., CNB Financial and Southern Banc go up and down completely randomly.
Pair Corralation between CNB Financial and Southern Banc
Given the investment horizon of 90 days CNB Financial is expected to generate 6.47 times more return on investment than Southern Banc. However, CNB Financial is 6.47 times more volatile than Southern Banc. It trades about 0.07 of its potential returns per unit of risk. Southern Banc is currently generating about 0.06 per unit of risk. If you would invest 1,714 in CNB Financial on September 14, 2024 and sell it today you would earn a total of 1,027 from holding CNB Financial or generate 59.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 10.94% |
| Values | Daily Returns |
CNB Financial vs. Southern Banc
Performance |
| Timeline |
| CNB Financial |
| Southern Banc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CNB Financial and Southern Banc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNB Financial and Southern Banc
The main advantage of trading using opposite CNB Financial and Southern Banc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNB Financial position performs unexpectedly, Southern 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 Southern Banc will offset losses from the drop in Southern Banc'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 |
| Southern Banc vs. 1895 of Wisconsin | Southern Banc vs. OptimumBank Holdings | Southern Banc vs. First National Bank | Southern Banc vs. CNB 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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