Correlation Between CF Bankshares and Summit Bancshares
Can any of the company-specific risk be diversified away by investing in both CF Bankshares and Summit 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 CF Bankshares and Summit Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CF Bankshares and Summit Bancshares, you can compare the effects of market volatilities on CF Bankshares and Summit 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 CF Bankshares with a short position of Summit Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Bankshares and Summit Bancshares.
Diversification Opportunities for CF Bankshares and Summit Bancshares
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CFBK and Summit is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding CF Bankshares and Summit Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Bancshares 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 Summit Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Bancshares has no effect on the direction of CF Bankshares i.e., CF Bankshares and Summit Bancshares go up and down completely randomly.
Pair Corralation between CF Bankshares and Summit Bancshares
Given the investment horizon of 90 days CF Bankshares is expected to generate 1.53 times more return on investment than Summit Bancshares. However, CF Bankshares is 1.53 times more volatile than Summit Bancshares. It trades about 0.15 of its potential returns per unit of risk. Summit Bancshares is currently generating about 0.06 per unit of risk. If you would invest 1,831 in CF Bankshares on September 3, 2024 and sell it today you would earn a total of 991.00 from holding CF Bankshares or generate 54.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.83% |
| Values | Daily Returns |
CF Bankshares vs. Summit Bancshares
Performance |
| Timeline |
| CF Bankshares |
| Summit Bancshares |
CF Bankshares and Summit Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Bankshares and Summit Bancshares
The main advantage of trading using opposite CF Bankshares and Summit Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Bankshares position performs unexpectedly, Summit 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 Summit Bancshares will offset losses from the drop in Summit Bancshares' long position.| CF Bankshares vs. JPMorgan Chase Co | CF Bankshares vs. Citigroup | CF Bankshares vs. Wells Fargo | CF Bankshares vs. Toronto Dominion Bank |
| Summit Bancshares vs. First Hawaiian | Summit Bancshares vs. Central Pacific Financial | Summit Bancshares vs. Territorial Bancorp | Summit Bancshares vs. Comerica |
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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