Correlation Between Cashmere Valley and Santa Cruz
Can any of the company-specific risk be diversified away by investing in both Cashmere Valley and Santa Cruz 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 Cashmere Valley and Santa Cruz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cashmere Valley Bank and Santa Cruz County, you can compare the effects of market volatilities on Cashmere Valley and Santa Cruz 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 Cashmere Valley with a short position of Santa Cruz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cashmere Valley and Santa Cruz.
Diversification Opportunities for Cashmere Valley and Santa Cruz
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cashmere and Santa is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cashmere Valley Bank and Santa Cruz County in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santa Cruz County and Cashmere Valley 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 Cashmere Valley Bank are associated (or correlated) with Santa Cruz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santa Cruz County has no effect on the direction of Cashmere Valley i.e., Cashmere Valley and Santa Cruz go up and down completely randomly.
Pair Corralation between Cashmere Valley and Santa Cruz
Given the investment horizon of 90 days Cashmere Valley Bank is expected to generate 2.48 times more return on investment than Santa Cruz. However, Cashmere Valley is 2.48 times more volatile than Santa Cruz County. It trades about 0.27 of its potential returns per unit of risk. Santa Cruz County is currently generating about -0.5 per unit of risk. If you would invest 5,850 in Cashmere Valley Bank on October 25, 2024 and sell it today you would earn a total of 240.00 from holding Cashmere Valley Bank or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cashmere Valley Bank vs. Santa Cruz County
Performance |
| Timeline |
| Cashmere Valley Bank |
| Santa Cruz County |
Cashmere Valley and Santa Cruz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cashmere Valley and Santa Cruz
The main advantage of trading using opposite Cashmere Valley and Santa Cruz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cashmere Valley position performs unexpectedly, Santa Cruz 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 Santa Cruz will offset losses from the drop in Santa Cruz's long position.| Cashmere Valley vs. Santa Cruz County | Cashmere Valley vs. Montfort Capital Corp | Cashmere Valley vs. Mullen Group | Cashmere Valley vs. Cartier Resources |
| Santa Cruz vs. Harbor Bankshares | Santa Cruz vs. Liberty Northwest Bancorp | Santa Cruz vs. Pioneer Bankcorp | Santa Cruz vs. Summit Bancshares |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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