Correlation Between CF Financial and Eastern
Can any of the company-specific risk be diversified away by investing in both CF Financial and Eastern 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 Financial and Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CF Financial and Eastern Co, you can compare the effects of market volatilities on CF Financial and Eastern 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 Financial with a short position of Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Financial and Eastern.
Diversification Opportunities for CF Financial and Eastern
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CFFI and Eastern is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding CF Financial and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern and CF Financial 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 Financial are associated (or correlated) with Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of CF Financial i.e., CF Financial and Eastern go up and down completely randomly.
Pair Corralation between CF Financial and Eastern
Given the investment horizon of 90 days CF Financial is expected to generate 0.93 times more return on investment than Eastern. However, CF Financial is 1.07 times less risky than Eastern. It trades about 0.21 of its potential returns per unit of risk. Eastern Co is currently generating about 0.11 per unit of risk. If you would invest 7,035 in CF Financial on November 2, 2024 and sell it today you would earn a total of 571.00 from holding CF Financial or generate 8.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CF Financial vs. Eastern Co
Performance |
| Timeline |
| CF Financial |
| Eastern |
CF Financial and Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Financial and Eastern
The main advantage of trading using opposite CF Financial and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Financial position performs unexpectedly, Eastern 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 will offset losses from the drop in Eastern's long position.| CF Financial vs. Home Federal Bancorp | CF Financial vs. First Financial Northwest | CF Financial vs. First Northwest Bancorp | CF Financial vs. First Capital |
| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. Hillman Solutions Corp | Eastern vs. AB SKF |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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