Correlation Between CNB Financial and Brighthouse Financial
Can any of the company-specific risk be diversified away by investing in both CNB Financial and Brighthouse Financial 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 Brighthouse Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNB Financial and Brighthouse Financial, you can compare the effects of market volatilities on CNB Financial and Brighthouse Financial 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 Brighthouse Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNB Financial and Brighthouse Financial.
Diversification Opportunities for CNB Financial and Brighthouse Financial
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CNB and Brighthouse is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding CNB Financial and Brighthouse Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighthouse Financial 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 Brighthouse Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brighthouse Financial has no effect on the direction of CNB Financial i.e., CNB Financial and Brighthouse Financial go up and down completely randomly.
Pair Corralation between CNB Financial and Brighthouse Financial
Assuming the 90 days horizon CNB Financial is expected to generate 0.58 times more return on investment than Brighthouse Financial. However, CNB Financial is 1.72 times less risky than Brighthouse Financial. It trades about 0.01 of its potential returns per unit of risk. Brighthouse Financial is currently generating about -0.05 per unit of risk. If you would invest 2,490 in CNB Financial on October 20, 2024 and sell it today you would earn a total of 8.00 from holding CNB Financial or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CNB Financial vs. Brighthouse Financial
Performance |
| Timeline |
| CNB Financial |
| Brighthouse Financial |
CNB Financial and Brighthouse Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNB Financial and Brighthouse Financial
The main advantage of trading using opposite CNB Financial and Brighthouse Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNB Financial position performs unexpectedly, Brighthouse Financial 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 Brighthouse Financial will offset losses from the drop in Brighthouse Financial's long position.| CNB Financial vs. Heartland Financial USA | CNB Financial vs. Dime Community Bancshares | CNB Financial vs. Pinnacle Financial Partners | CNB Financial vs. Fulton Financial |
| Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. First Citizens 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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