Correlation Between Commercial National and Consumers Bancorp
Can any of the company-specific risk be diversified away by investing in both Commercial National and Consumers Bancorp 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 Commercial National and Consumers Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial National Financial and Consumers Bancorp, you can compare the effects of market volatilities on Commercial National and Consumers Bancorp 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 Commercial National with a short position of Consumers Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial National and Consumers Bancorp.
Diversification Opportunities for Commercial National and Consumers Bancorp
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Commercial and Consumers is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Commercial National Financial and Consumers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumers Bancorp and Commercial National 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 Commercial National Financial are associated (or correlated) with Consumers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumers Bancorp has no effect on the direction of Commercial National i.e., Commercial National and Consumers Bancorp go up and down completely randomly.
Pair Corralation between Commercial National and Consumers Bancorp
Given the investment horizon of 90 days Commercial National Financial is expected to generate 1.07 times more return on investment than Consumers Bancorp. However, Commercial National is 1.07 times more volatile than Consumers Bancorp. It trades about 0.07 of its potential returns per unit of risk. Consumers Bancorp is currently generating about 0.05 per unit of risk. If you would invest 774.00 in Commercial National Financial on September 3, 2024 and sell it today you would earn a total of 201.00 from holding Commercial National Financial or generate 25.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.54% |
| Values | Daily Returns |
Commercial National Financial vs. Consumers Bancorp
Performance |
| Timeline |
| Commercial National |
| Consumers Bancorp |
Commercial National and Consumers Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial National and Consumers Bancorp
The main advantage of trading using opposite Commercial National and Consumers Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial National position performs unexpectedly, Consumers Bancorp 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 Consumers Bancorp will offset losses from the drop in Consumers Bancorp's long position.| Commercial National vs. Eastern Michigan Financial | Commercial National vs. Mifflinburg Bancorp | Commercial National vs. Apollo Bancorp | Commercial National vs. Community Bankers |
| Consumers Bancorp vs. Century Next Financial | Consumers Bancorp vs. Citizens Financial Corp | Consumers Bancorp vs. Triad Business Bank | Consumers Bancorp vs. First Ottawa 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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