Correlation Between CullenFrost Bankers and Cadence Bank
Can any of the company-specific risk be diversified away by investing in both CullenFrost Bankers and Cadence 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 CullenFrost Bankers and Cadence Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CullenFrost Bankers and Cadence Bank, you can compare the effects of market volatilities on CullenFrost Bankers and Cadence 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 CullenFrost Bankers with a short position of Cadence Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of CullenFrost Bankers and Cadence Bank.
Diversification Opportunities for CullenFrost Bankers and Cadence Bank
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CullenFrost and Cadence is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CullenFrost Bankers and Cadence Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Bank and CullenFrost Bankers 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 CullenFrost Bankers are associated (or correlated) with Cadence Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Bank has no effect on the direction of CullenFrost Bankers i.e., CullenFrost Bankers and Cadence Bank go up and down completely randomly.
Pair Corralation between CullenFrost Bankers and Cadence Bank
Assuming the 90 days trading horizon CullenFrost Bankers is expected to generate 1.38 times less return on investment than Cadence Bank. But when comparing it to its historical volatility, CullenFrost Bankers is 1.02 times less risky than Cadence Bank. It trades about 0.02 of its potential returns per unit of risk. Cadence Bank is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,836 in Cadence Bank on August 26, 2024 and sell it today you would earn a total of 263.00 from holding Cadence Bank or generate 14.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CullenFrost Bankers vs. Cadence Bank
Performance |
| Timeline |
| CullenFrost Bankers |
| Cadence Bank |
CullenFrost Bankers and Cadence Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CullenFrost Bankers and Cadence Bank
The main advantage of trading using opposite CullenFrost Bankers and Cadence Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CullenFrost Bankers position performs unexpectedly, Cadence 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 Cadence Bank will offset losses from the drop in Cadence Bank's long position.| CullenFrost Bankers vs. Morgan Stanley | CullenFrost Bankers vs. KeyCorp | CullenFrost Bankers vs. KeyCorp | CullenFrost Bankers vs. KeyCorp |
| Cadence Bank vs. Morgan Stanley | Cadence Bank vs. KeyCorp | Cadence Bank vs. KeyCorp | Cadence Bank vs. KeyCorp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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