Correlation Between CF Bankshares and Eastern Bankshares
Can any of the company-specific risk be diversified away by investing in both CF Bankshares and Eastern Bankshares 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 CF Bankshares and Eastern Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CF Bankshares and Eastern Bankshares, you can compare the effects of market volatilities on CF Bankshares and Eastern Bankshares 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 CF Bankshares with a short position of Eastern Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Bankshares and Eastern Bankshares.
Diversification Opportunities for CF Bankshares and Eastern Bankshares
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CFBK and Eastern is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding CF Bankshares and Eastern Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Bankshares and CF Bankshares 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 CF Bankshares are associated (or correlated) with Eastern Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Bankshares has no effect on the direction of CF Bankshares i.e., CF Bankshares and Eastern Bankshares go up and down completely randomly.
Pair Corralation between CF Bankshares and Eastern Bankshares
Given the investment horizon of 90 days CF Bankshares is expected to generate 1.17 times less return on investment than Eastern Bankshares. But when comparing it to its historical volatility, CF Bankshares is 1.15 times less risky than Eastern Bankshares. It trades about 0.17 of its potential returns per unit of risk. Eastern Bankshares is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,670 in Eastern Bankshares on August 29, 2024 and sell it today you would earn a total of 198.00 from holding Eastern Bankshares or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CF Bankshares vs. Eastern Bankshares
Performance |
| Timeline |
| CF Bankshares |
| Eastern Bankshares |
CF Bankshares and Eastern Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Bankshares and Eastern Bankshares
The main advantage of trading using opposite CF Bankshares and Eastern Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Bankshares position performs unexpectedly, Eastern Bankshares 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 Eastern Bankshares will offset losses from the drop in Eastern Bankshares' long position.| CF Bankshares vs. Magyar Bancorp | CF Bankshares vs. Home Federal Bancorp | CF Bankshares vs. Community West Bancshares | CF Bankshares vs. First Financial Northwest |
| Eastern Bankshares vs. Western New England | Eastern Bankshares vs. Northeast Community Bancorp | Eastern Bankshares vs. Independent Bank | Eastern Bankshares vs. The First 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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