Correlation Between Columbia Financial and Capitol Federal
Can any of the company-specific risk be diversified away by investing in both Columbia Financial and Capitol Federal 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 Columbia Financial and Capitol Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Financial and Capitol Federal Financial, you can compare the effects of market volatilities on Columbia Financial and Capitol Federal 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 Columbia Financial with a short position of Capitol Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Financial and Capitol Federal.
Diversification Opportunities for Columbia Financial and Capitol Federal
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Columbia and Capitol is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Financial and Capitol Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Federal Financial and Columbia 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 Columbia Financial are associated (or correlated) with Capitol Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Federal Financial has no effect on the direction of Columbia Financial i.e., Columbia Financial and Capitol Federal go up and down completely randomly.
Pair Corralation between Columbia Financial and Capitol Federal
Given the investment horizon of 90 days Columbia Financial is expected to under-perform the Capitol Federal. But the stock apears to be less risky and, when comparing its historical volatility, Columbia Financial is 1.02 times less risky than Capitol Federal. The stock trades about -0.02 of its potential returns per unit of risk. The Capitol Federal Financial is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 765.00 in Capitol Federal Financial on November 2, 2024 and sell it today you would lose (171.00) from holding Capitol Federal Financial or give up 22.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Financial vs. Capitol Federal Financial
Performance |
| Timeline |
| Columbia Financial |
| Capitol Federal Financial |
Columbia Financial and Capitol Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Financial and Capitol Federal
The main advantage of trading using opposite Columbia Financial and Capitol Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Financial position performs unexpectedly, Capitol Federal 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 Capitol Federal will offset losses from the drop in Capitol Federal's long position.| Columbia Financial vs. Community West Bancshares | Columbia Financial vs. First Financial Northwest | Columbia Financial vs. First Northwest Bancorp | Columbia Financial vs. First Capital |
| Capitol Federal vs. Independent Bank | Capitol Federal vs. BankFinancial | Capitol Federal vs. Business First Bancshares | Capitol Federal vs. First 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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