Correlation Between Civista Bancshares and First Northern
Can any of the company-specific risk be diversified away by investing in both Civista Bancshares and First Northern 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 Civista Bancshares and First Northern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Civista Bancshares and First Northern Community, you can compare the effects of market volatilities on Civista Bancshares and First Northern 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 Civista Bancshares with a short position of First Northern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Civista Bancshares and First Northern.
Diversification Opportunities for Civista Bancshares and First Northern
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Civista and First is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Civista Bancshares and First Northern Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Northern Community and Civista Bancshares 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 Civista Bancshares are associated (or correlated) with First Northern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Northern Community has no effect on the direction of Civista Bancshares i.e., Civista Bancshares and First Northern go up and down completely randomly.
Pair Corralation between Civista Bancshares and First Northern
Given the investment horizon of 90 days Civista Bancshares is expected to generate 3.19 times more return on investment than First Northern. However, Civista Bancshares is 3.19 times more volatile than First Northern Community. It trades about 0.37 of its potential returns per unit of risk. First Northern Community is currently generating about 0.03 per unit of risk. If you would invest 1,835 in Civista Bancshares on August 29, 2024 and sell it today you would earn a total of 445.00 from holding Civista Bancshares or generate 24.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Civista Bancshares vs. First Northern Community
Performance |
| Timeline |
| Civista Bancshares |
| First Northern Community |
Civista Bancshares and First Northern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Civista Bancshares and First Northern
The main advantage of trading using opposite Civista Bancshares and First Northern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Civista Bancshares position performs unexpectedly, First Northern 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 Northern will offset losses from the drop in First Northern's long position.The idea behind Civista Bancshares and First Northern Community pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| First Northern vs. Invesco High Income | First Northern vs. Blackrock Muniholdings Ny | First Northern vs. Nuveen California Select | First Northern vs. MFS Investment Grade |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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