Correlation Between CF Bankshares and First Capital
Can any of the company-specific risk be diversified away by investing in both CF Bankshares and First Capital 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 First Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CF Bankshares and First Capital, you can compare the effects of market volatilities on CF Bankshares and First Capital 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 First Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Bankshares and First Capital.
Diversification Opportunities for CF Bankshares and First Capital
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between CFBK and First is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding CF Bankshares and First Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Capital 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 First Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Capital has no effect on the direction of CF Bankshares i.e., CF Bankshares and First Capital go up and down completely randomly.
Pair Corralation between CF Bankshares and First Capital
Given the investment horizon of 90 days CF Bankshares is expected to generate 1.06 times less return on investment than First Capital. But when comparing it to its historical volatility, CF Bankshares is 1.11 times less risky than First Capital. It trades about 0.04 of its potential returns per unit of risk. First Capital is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,432 in First Capital on August 28, 2024 and sell it today you would earn a total of 833.00 from holding First Capital or generate 34.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.36% |
| Values | Daily Returns |
CF Bankshares vs. First Capital
Performance |
| Timeline |
| CF Bankshares |
| First Capital |
CF Bankshares and First Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Bankshares and First Capital
The main advantage of trading using opposite CF Bankshares and First Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Bankshares position performs unexpectedly, First Capital 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 First Capital will offset losses from the drop in First Capital's 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 |
| First Capital vs. Fifth Third Bancorp | First Capital vs. Huntington Bancshares Incorporated | First Capital vs. MT Bank |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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