Correlation Between CNB Financial and MainStreet Bancshares
Can any of the company-specific risk be diversified away by investing in both CNB Financial and MainStreet Bancshares 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 MainStreet Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNB Financial and MainStreet Bancshares, you can compare the effects of market volatilities on CNB Financial and MainStreet Bancshares 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 MainStreet Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNB Financial and MainStreet Bancshares.
Diversification Opportunities for CNB Financial and MainStreet Bancshares
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CNB and MainStreet is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding CNB Financial and MainStreet Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MainStreet Bancshares 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 MainStreet Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MainStreet Bancshares has no effect on the direction of CNB Financial i.e., CNB Financial and MainStreet Bancshares go up and down completely randomly.
Pair Corralation between CNB Financial and MainStreet Bancshares
Assuming the 90 days horizon CNB Financial is expected to generate 1.16 times less return on investment than MainStreet Bancshares. But when comparing it to its historical volatility, CNB Financial is 1.15 times less risky than MainStreet Bancshares. It trades about 0.09 of its potential returns per unit of risk. MainStreet Bancshares is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,354 in MainStreet Bancshares on October 26, 2024 and sell it today you would earn a total of 144.00 from holding MainStreet Bancshares or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CNB Financial vs. MainStreet Bancshares
Performance |
| Timeline |
| CNB Financial |
| MainStreet Bancshares |
CNB Financial and MainStreet Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNB Financial and MainStreet Bancshares
The main advantage of trading using opposite CNB Financial and MainStreet Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNB Financial position performs unexpectedly, MainStreet Bancshares 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 MainStreet Bancshares will offset losses from the drop in MainStreet Bancshares' 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 |
| MainStreet Bancshares vs. CNB Financial | MainStreet Bancshares vs. Pinnacle Financial Partners | MainStreet Bancshares vs. OceanFirst 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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