Correlation Between ChoiceOne Financial and Central Valley
Can any of the company-specific risk be diversified away by investing in both ChoiceOne Financial and Central Valley 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 ChoiceOne Financial and Central Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChoiceOne Financial Services and Central Valley Community, you can compare the effects of market volatilities on ChoiceOne Financial and Central Valley 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 ChoiceOne Financial with a short position of Central Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChoiceOne Financial and Central Valley.
Diversification Opportunities for ChoiceOne Financial and Central Valley
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ChoiceOne and Central is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding ChoiceOne Financial Services and Central Valley Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Valley Community and ChoiceOne 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 ChoiceOne Financial Services are associated (or correlated) with Central Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Valley Community has no effect on the direction of ChoiceOne Financial i.e., ChoiceOne Financial and Central Valley go up and down completely randomly.
Pair Corralation between ChoiceOne Financial and Central Valley
Given the investment horizon of 90 days ChoiceOne Financial Services is expected to generate 0.91 times more return on investment than Central Valley. However, ChoiceOne Financial Services is 1.1 times less risky than Central Valley. It trades about 0.05 of its potential returns per unit of risk. Central Valley Community is currently generating about -0.03 per unit of risk. If you would invest 2,312 in ChoiceOne Financial Services on August 30, 2024 and sell it today you would earn a total of 1,415 from holding ChoiceOne Financial Services or generate 61.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 31.25% |
| Values | Daily Returns |
ChoiceOne Financial Services vs. Central Valley Community
Performance |
| Timeline |
| ChoiceOne Financial |
| Central Valley Community |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ChoiceOne Financial and Central Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChoiceOne Financial and Central Valley
The main advantage of trading using opposite ChoiceOne Financial and Central Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChoiceOne Financial position performs unexpectedly, Central Valley 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 Central Valley will offset losses from the drop in Central Valley's long position.| ChoiceOne Financial vs. Home Federal Bancorp | ChoiceOne Financial vs. First Northwest Bancorp | ChoiceOne Financial vs. Lake Shore Bancorp | ChoiceOne Financial vs. Affinity Bancshares |
| Central Valley vs. Home Federal Bancorp | Central Valley vs. First Northwest Bancorp | Central Valley vs. Magyar Bancorp | Central Valley vs. First United |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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