Correlation Between CVB Financial and Preferred Bank
Can any of the company-specific risk be diversified away by investing in both CVB Financial and Preferred 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 Preferred 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 Preferred Bank, you can compare the effects of market volatilities on CVB Financial and Preferred 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 Preferred Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVB Financial and Preferred Bank.
Diversification Opportunities for CVB Financial and Preferred Bank
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between CVB and Preferred is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial and Preferred Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Preferred Bank 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 Preferred Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Preferred Bank has no effect on the direction of CVB Financial i.e., CVB Financial and Preferred Bank go up and down completely randomly.
Pair Corralation between CVB Financial and Preferred Bank
Given the investment horizon of 90 days CVB Financial is expected to generate 1.32 times more return on investment than Preferred Bank. However, CVB Financial is 1.32 times more volatile than Preferred Bank. It trades about 0.2 of its potential returns per unit of risk. Preferred Bank is currently generating about 0.15 per unit of risk. If you would invest 1,974 in CVB Financial on August 31, 2024 and sell it today you would earn a total of 368.00 from holding CVB Financial or generate 18.64% 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. Preferred Bank
Performance |
| Timeline |
| CVB Financial |
| Preferred Bank |
CVB Financial and Preferred Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVB Financial and Preferred Bank
The main advantage of trading using opposite CVB Financial and Preferred Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVB Financial position performs unexpectedly, Preferred 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 Preferred Bank will offset losses from the drop in Preferred Bank'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 |
| Preferred Bank vs. Pacific Premier Bancorp | Preferred Bank vs. Heritage Financial | Preferred Bank vs. QCR Holdings | Preferred Bank vs. Lakeland Financial |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |