Correlation Between CNB and Bank of Botetourt
Can any of the company-specific risk be diversified away by investing in both CNB and Bank of Botetourt 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 CNB and Bank of Botetourt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNB Corporation and Bank of Botetourt, you can compare the effects of market volatilities on CNB and Bank of Botetourt 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 CNB with a short position of Bank of Botetourt. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNB and Bank of Botetourt.
Diversification Opportunities for CNB and Bank of Botetourt
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CNB and Bank is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding CNB Corp. and Bank of Botetourt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Botetourt and CNB 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 CNB Corporation are associated (or correlated) with Bank of Botetourt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Botetourt has no effect on the direction of CNB i.e., CNB and Bank of Botetourt go up and down completely randomly.
Pair Corralation between CNB and Bank of Botetourt
Given the investment horizon of 90 days CNB Corporation is expected to under-perform the Bank of Botetourt. But the pink sheet apears to be less risky and, when comparing its historical volatility, CNB Corporation is 2.08 times less risky than Bank of Botetourt. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Bank of Botetourt is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,175 in Bank of Botetourt on August 25, 2024 and sell it today you would earn a total of 39.00 from holding Bank of Botetourt or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CNB Corp. vs. Bank of Botetourt
Performance |
| Timeline |
| CNB Corporation |
| Bank of Botetourt |
CNB and Bank of Botetourt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNB and Bank of Botetourt
The main advantage of trading using opposite CNB and Bank of Botetourt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNB position performs unexpectedly, Bank of Botetourt 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 Bank of Botetourt will offset losses from the drop in Bank of Botetourt's long position.| CNB vs. Standard Bank Group | CNB vs. PSB Holdings | CNB vs. United Overseas Bank | CNB vs. Turkiye Garanti Bankasi |
| Bank of Botetourt vs. Century Financial Corp | Bank of Botetourt vs. FS Bancorp | Bank of Botetourt vs. Lyons Bancorp | Bank of Botetourt vs. Solvay Bank Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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