Correlation Between CVB Financial and Provident Financial
Can any of the company-specific risk be diversified away by investing in both CVB Financial 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 CVB Financial and Provident Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVB Financial and Provident Financial Services, you can compare the effects of market volatilities on CVB Financial 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 CVB Financial with a short position of Provident Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVB Financial and Provident Financial.
Diversification Opportunities for CVB Financial and Provident Financial
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CVB and Provident is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial and Provident Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provident Financial 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 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 CVB Financial i.e., CVB Financial and Provident Financial go up and down completely randomly.
Pair Corralation between CVB Financial and Provident Financial
Given the investment horizon of 90 days CVB Financial is expected to generate 1.17 times more return on investment than Provident Financial. However, CVB Financial is 1.17 times more volatile than Provident Financial Services. It trades about 0.25 of its potential returns per unit of risk. Provident Financial Services is currently generating about 0.19 per unit of risk. If you would invest 1,958 in CVB Financial on August 28, 2024 and sell it today you would earn a total of 442.00 from holding CVB Financial or generate 22.57% 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. Provident Financial Services
Performance |
| Timeline |
| CVB Financial |
| Provident Financial |
CVB Financial and Provident Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVB Financial and Provident Financial
The main advantage of trading using opposite CVB Financial and Provident Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVB Financial 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.| CVB Financial vs. First Interstate BancSystem | CVB Financial vs. First Financial Bankshares | CVB Financial vs. Independent Bank Group | CVB Financial vs. Eagle Bancorp Montana |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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