Correlation Between Community Heritage and Freedom Bank
Can any of the company-specific risk be diversified away by investing in both Community Heritage and Freedom 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 Community Heritage and Freedom Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Community Heritage Financial and Freedom Bank of, you can compare the effects of market volatilities on Community Heritage and Freedom 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 Community Heritage with a short position of Freedom Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Heritage and Freedom Bank.
Diversification Opportunities for Community Heritage and Freedom Bank
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Community and Freedom is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Community Heritage Financial and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank and Community Heritage 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 Community Heritage Financial are associated (or correlated) with Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of Community Heritage i.e., Community Heritage and Freedom Bank go up and down completely randomly.
Pair Corralation between Community Heritage and Freedom Bank
Given the investment horizon of 90 days Community Heritage Financial is expected to generate 0.73 times more return on investment than Freedom Bank. However, Community Heritage Financial is 1.37 times less risky than Freedom Bank. It trades about 0.21 of its potential returns per unit of risk. Freedom Bank of is currently generating about 0.02 per unit of risk. If you would invest 2,060 in Community Heritage Financial on November 2, 2024 and sell it today you would earn a total of 390.00 from holding Community Heritage Financial or generate 18.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.1% |
| Values | Daily Returns |
Community Heritage Financial vs. Freedom Bank of
Performance |
| Timeline |
| Community Heritage |
| Freedom Bank |
Community Heritage and Freedom Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community Heritage and Freedom Bank
The main advantage of trading using opposite Community Heritage and Freedom Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Heritage position performs unexpectedly, Freedom 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 Freedom Bank will offset losses from the drop in Freedom Bank's long position.| Community Heritage vs. National Capital Bank | Community Heritage vs. Citizens Financial Corp | Community Heritage vs. North Dallas Bank | Community Heritage vs. Lewis Clark Bancorp |
| Freedom Bank vs. National Capital Bank | Freedom Bank vs. Community Heritage Financial | Freedom Bank vs. Citizens Financial Corp | Freedom Bank vs. Bank of Idaho |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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