Correlation Between Community Trust and Provident Financial
Can any of the company-specific risk be diversified away by investing in both Community Trust and Provident 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 Community Trust and Provident Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Community Trust Bancorp and Provident Financial Services, you can compare the effects of market volatilities on Community Trust and Provident 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 Community Trust with a short position of Provident Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Trust and Provident Financial.
Diversification Opportunities for Community Trust and Provident Financial
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Community and Provident is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Community Trust Bancorp and Provident Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provident Financial and Community Trust 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 Community Trust Bancorp are associated (or correlated) with Provident Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provident Financial has no effect on the direction of Community Trust i.e., Community Trust and Provident Financial go up and down completely randomly.
Pair Corralation between Community Trust and Provident Financial
Given the investment horizon of 90 days Community Trust Bancorp is expected to generate 1.06 times more return on investment than Provident Financial. However, Community Trust is 1.06 times more volatile than Provident Financial Services. It trades about 0.19 of its potential returns per unit of risk. Provident Financial Services is currently generating about 0.16 per unit of risk. If you would invest 4,822 in Community Trust Bancorp on August 28, 2024 and sell it today you would earn a total of 1,185 from holding Community Trust Bancorp or generate 24.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community Trust Bancorp vs. Provident Financial Services
Performance |
| Timeline |
| Community Trust Bancorp |
| Provident Financial |
Community Trust and Provident Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community Trust and Provident Financial
The main advantage of trading using opposite Community Trust and Provident Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Trust position performs unexpectedly, Provident 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 Provident Financial will offset losses from the drop in Provident Financial's long position.| Community Trust vs. Home Bancorp | Community Trust vs. Heritage Financial | Community Trust vs. First Northwest Bancorp | Community Trust vs. HomeTrust Bancshares |
| Provident Financial vs. First Mid Illinois | Provident Financial vs. ConnectOne Bancorp | Provident Financial vs. Finward Bancorp | Provident Financial vs. CrossFirst Bankshares |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Stocks Directory Find actively traded stocks across global markets |