Correlation Between CNFinance Holdings and Timbercreek Financial
Can any of the company-specific risk be diversified away by investing in both CNFinance Holdings and Timbercreek Financial 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 CNFinance Holdings and Timbercreek Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNFinance Holdings and Timbercreek Financial Corp, you can compare the effects of market volatilities on CNFinance Holdings and Timbercreek Financial 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 CNFinance Holdings with a short position of Timbercreek Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNFinance Holdings and Timbercreek Financial.
Diversification Opportunities for CNFinance Holdings and Timbercreek Financial
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CNFinance and Timbercreek is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding CNFinance Holdings and Timbercreek Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timbercreek Financial and CNFinance Holdings 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 CNFinance Holdings are associated (or correlated) with Timbercreek Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timbercreek Financial has no effect on the direction of CNFinance Holdings i.e., CNFinance Holdings and Timbercreek Financial go up and down completely randomly.
Pair Corralation between CNFinance Holdings and Timbercreek Financial
Considering the 90-day investment horizon CNFinance Holdings is expected to generate 3.8 times more return on investment than Timbercreek Financial. However, CNFinance Holdings is 3.8 times more volatile than Timbercreek Financial Corp. It trades about 0.07 of its potential returns per unit of risk. Timbercreek Financial Corp is currently generating about -0.03 per unit of risk. If you would invest 100.00 in CNFinance Holdings on November 2, 2024 and sell it today you would earn a total of 35.00 from holding CNFinance Holdings or generate 35.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.17% |
| Values | Daily Returns |
CNFinance Holdings vs. Timbercreek Financial Corp
Performance |
| Timeline |
| CNFinance Holdings |
| Timbercreek Financial |
CNFinance Holdings and Timbercreek Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNFinance Holdings and Timbercreek Financial
The main advantage of trading using opposite CNFinance Holdings and Timbercreek Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNFinance Holdings position performs unexpectedly, Timbercreek Financial 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 Timbercreek Financial will offset losses from the drop in Timbercreek Financial's long position.| CNFinance Holdings vs. Guild Holdings Co | CNFinance Holdings vs. PennyMac Finl Svcs | CNFinance Holdings vs. Security National Financial | CNFinance Holdings vs. Encore Capital Group |
| Timbercreek Financial vs. PennyMac Finl Svcs | Timbercreek Financial vs. Encore Capital Group | Timbercreek Financial vs. Rocket Companies | Timbercreek Financial vs. Loandepot |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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