Correlation Between CNFinance Holdings and Waterstone Financial
Can any of the company-specific risk be diversified away by investing in both CNFinance Holdings and Waterstone 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 Waterstone 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 Waterstone Financial, you can compare the effects of market volatilities on CNFinance Holdings and Waterstone 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 Waterstone Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNFinance Holdings and Waterstone Financial.
Diversification Opportunities for CNFinance Holdings and Waterstone Financial
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CNFinance and Waterstone is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding CNFinance Holdings and Waterstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waterstone 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 Waterstone Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waterstone Financial has no effect on the direction of CNFinance Holdings i.e., CNFinance Holdings and Waterstone Financial go up and down completely randomly.
Pair Corralation between CNFinance Holdings and Waterstone Financial
Considering the 90-day investment horizon CNFinance Holdings is expected to under-perform the Waterstone Financial. In addition to that, CNFinance Holdings is 2.65 times more volatile than Waterstone Financial. It trades about -0.01 of its total potential returns per unit of risk. Waterstone Financial is currently generating about 0.01 per unit of volatility. If you would invest 1,515 in Waterstone Financial on August 27, 2024 and sell it today you would earn a total of 46.00 from holding Waterstone Financial or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CNFinance Holdings vs. Waterstone Financial
Performance |
| Timeline |
| CNFinance Holdings |
| Waterstone Financial |
CNFinance Holdings and Waterstone Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNFinance Holdings and Waterstone Financial
The main advantage of trading using opposite CNFinance Holdings and Waterstone Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNFinance Holdings position performs unexpectedly, Waterstone 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 Waterstone Financial will offset losses from the drop in Waterstone 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 |
| Waterstone Financial vs. National Bank Holdings | Waterstone Financial vs. Community West Bancshares | Waterstone Financial vs. Financial Institutions | Waterstone Financial vs. Kearny Financial 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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