Correlation Between CVB Financial and First Interstate
Can any of the company-specific risk be diversified away by investing in both CVB Financial and First Interstate 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 CVB Financial and First Interstate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVB Financial and First Interstate BancSystem, you can compare the effects of market volatilities on CVB Financial and First Interstate 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 CVB Financial with a short position of First Interstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVB Financial and First Interstate.
Diversification Opportunities for CVB Financial and First Interstate
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CVB and First is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial and First Interstate BancSystem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Interstate Ban and CVB 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 CVB Financial are associated (or correlated) with First Interstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Interstate Ban has no effect on the direction of CVB Financial i.e., CVB Financial and First Interstate go up and down completely randomly.
Pair Corralation between CVB Financial and First Interstate
Given the investment horizon of 90 days CVB Financial is expected to generate 1.04 times more return on investment than First Interstate. However, CVB Financial is 1.04 times more volatile than First Interstate BancSystem. It trades about 0.09 of its potential returns per unit of risk. First Interstate BancSystem is currently generating about 0.07 per unit of risk. If you would invest 1,270 in CVB Financial on August 28, 2024 and sell it today you would earn a total of 1,130 from holding CVB Financial or generate 88.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVB Financial vs. First Interstate BancSystem
Performance |
| Timeline |
| CVB Financial |
| First Interstate Ban |
CVB Financial and First Interstate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVB Financial and First Interstate
The main advantage of trading using opposite CVB Financial and First Interstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVB Financial position performs unexpectedly, First Interstate 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 First Interstate will offset losses from the drop in First Interstate's long position.| CVB Financial vs. First Interstate BancSystem | CVB Financial vs. First Financial Bankshares | CVB Financial vs. Independent Bank Group | CVB Financial vs. Eagle Bancorp Montana |
| First Interstate vs. First Financial Bankshares | First Interstate vs. Independent Bank Group | First Interstate vs. CVB Financial | First Interstate vs. Eagle Bancorp Montana |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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