Correlation Between CF Bankshares and Village Bank
Can any of the company-specific risk be diversified away by investing in both CF Bankshares and Village Bank 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 Village Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CF Bankshares and Village Bank and, you can compare the effects of market volatilities on CF Bankshares and Village Bank 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 Village Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Bankshares and Village Bank.
Diversification Opportunities for CF Bankshares and Village Bank
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CFBK and Village is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding CF Bankshares and Village Bank and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village Bank 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 Village Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Bank has no effect on the direction of CF Bankshares i.e., CF Bankshares and Village Bank go up and down completely randomly.
Pair Corralation between CF Bankshares and Village Bank
Given the investment horizon of 90 days CF Bankshares is expected to generate 90.65 times less return on investment than Village Bank. But when comparing it to its historical volatility, CF Bankshares is 61.76 times less risky than Village Bank. It trades about 0.08 of its potential returns per unit of risk. Village Bank and is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,045 in Village Bank and on August 25, 2024 and sell it today you would earn a total of 3,745 from holding Village Bank and or generate 92.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 72.34% |
| Values | Daily Returns |
CF Bankshares vs. Village Bank and
Performance |
| Timeline |
| CF Bankshares |
| Village Bank |
CF Bankshares and Village Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Bankshares and Village Bank
The main advantage of trading using opposite CF Bankshares and Village Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Bankshares position performs unexpectedly, Village Bank 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 Village Bank will offset losses from the drop in Village Bank'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 |
| Village Bank vs. Prime Meridian Holding | Village Bank vs. William Penn Bancorp | Village Bank vs. Pathfinder Bancorp | Village Bank vs. Magyar Bancorp |
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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