Correlation Between Commercial National and Northfield Bancorp
Can any of the company-specific risk be diversified away by investing in both Commercial National and Northfield 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 Northfield 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 Northfield Bancorp, you can compare the effects of market volatilities on Commercial National and Northfield 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 Northfield Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial National and Northfield Bancorp.
Diversification Opportunities for Commercial National and Northfield Bancorp
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Commercial and Northfield is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Commercial National Financial and Northfield Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northfield 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 Northfield Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northfield Bancorp has no effect on the direction of Commercial National i.e., Commercial National and Northfield Bancorp go up and down completely randomly.
Pair Corralation between Commercial National and Northfield Bancorp
Given the investment horizon of 90 days Commercial National is expected to generate 2.17 times less return on investment than Northfield Bancorp. But when comparing it to its historical volatility, Commercial National Financial is 1.05 times less risky than Northfield Bancorp. It trades about 0.09 of its potential returns per unit of risk. Northfield Bancorp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,125 in Northfield Bancorp on November 8, 2024 and sell it today you would earn a total of 82.00 from holding Northfield Bancorp or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial National Financial vs. Northfield Bancorp
Performance |
| Timeline |
| Commercial National |
| Northfield Bancorp |
Commercial National and Northfield Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial National and Northfield Bancorp
The main advantage of trading using opposite Commercial National and Northfield Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial National position performs unexpectedly, Northfield 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 Northfield Bancorp will offset losses from the drop in Northfield 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 |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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