Correlation Between CTM and CFG BANK

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Can any of the company-specific risk be diversified away by investing in both CTM and CFG BANK 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 CTM and CFG BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTM and CFG BANK, you can compare the effects of market volatilities on CTM and CFG BANK 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 CTM with a short position of CFG BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTM and CFG BANK.

Diversification Opportunities for CTM and CFG BANK

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between CTM and CFG is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding CTM and CFG BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CFG BANK and CTM 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 CTM are associated (or correlated) with CFG BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CFG BANK has no effect on the direction of CTM i.e., CTM and CFG BANK go up and down completely randomly.

Pair Corralation between CTM and CFG BANK

Assuming the 90 days trading horizon CTM is expected to under-perform the CFG BANK. In addition to that, CTM is 2.34 times more volatile than CFG BANK. It trades about -0.05 of its total potential returns per unit of risk. CFG BANK is currently generating about 0.09 per unit of volatility. If you would invest  22,610  in CFG BANK on December 3, 2024 and sell it today you would earn a total of  1,090  from holding CFG BANK or generate 4.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

CTM  vs.  CFG BANK

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20020406080
JavaScript chart by amCharts 3.21.15CTM CFG-BANK
       Timeline  
CTM 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in CTM are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, CTM exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15JanFebFebMar7008009001,0001,1001,2001,300
CFG BANK 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in CFG BANK are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental drivers, CFG BANK displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15JanFebFebMar210220230240250

CTM and CFG BANK Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-12.9-9.66-6.42-3.180.03.477.0710.6614.2617.85 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15CTM CFG-BANK
       Returns  

Pair Trading with CTM and CFG BANK

The main advantage of trading using opposite CTM and CFG BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTM position performs unexpectedly, CFG BANK 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 CFG BANK will offset losses from the drop in CFG BANK's long position.
The idea behind CTM and CFG BANK pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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