Correlation Between CVB Financial and Metropolitan Bank
Can any of the company-specific risk be diversified away by investing in both CVB Financial and Metropolitan 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 CVB Financial and Metropolitan Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVB Financial and Metropolitan Bank Holding, you can compare the effects of market volatilities on CVB Financial and Metropolitan 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 CVB Financial with a short position of Metropolitan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVB Financial and Metropolitan Bank.
Diversification Opportunities for CVB Financial and Metropolitan Bank
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CVB and Metropolitan is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial and Metropolitan Bank Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank Holding 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 Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank Holding has no effect on the direction of CVB Financial i.e., CVB Financial and Metropolitan Bank go up and down completely randomly.
Pair Corralation between CVB Financial and Metropolitan Bank
Given the investment horizon of 90 days CVB Financial is expected to generate 0.81 times more return on investment than Metropolitan Bank. However, CVB Financial is 1.23 times less risky than Metropolitan Bank. It trades about -0.16 of its potential returns per unit of risk. Metropolitan Bank Holding is currently generating about -0.23 per unit of risk. If you would invest 2,094 in CVB Financial on November 29, 2024 and sell it today you would lose (108.00) from holding CVB Financial or give up 5.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVB Financial vs. Metropolitan Bank Holding
Performance |
| Timeline |
| CVB Financial |
| Metropolitan Bank Holding |
CVB Financial and Metropolitan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVB Financial and Metropolitan Bank
The main advantage of trading using opposite CVB Financial and Metropolitan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVB Financial position performs unexpectedly, Metropolitan 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 Metropolitan Bank will offset losses from the drop in Metropolitan Bank's long position.| CVB Financial vs. First Interstate BancSystem | CVB Financial vs. First Financial Bankshares | CVB Financial vs. Eagle Bancorp Montana | CVB Financial vs. Brookline Bancorp |
| Metropolitan Bank vs. Customers Bancorp | Metropolitan Bank vs. BayCom Corp | Metropolitan Bank vs. Capital Bancorp | Metropolitan Bank vs. Investar Holding Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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