Correlation Between CP ALL and Southern BancShares
Can any of the company-specific risk be diversified away by investing in both CP ALL and Southern BancShares 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 CP ALL and Southern BancShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CP ALL Public and Southern BancShares PFD, you can compare the effects of market volatilities on CP ALL and Southern BancShares 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 CP ALL with a short position of Southern BancShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of CP ALL and Southern BancShares.
Diversification Opportunities for CP ALL and Southern BancShares
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CVPBF and Southern is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and Southern BancShares PFD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern BancShares PFD and CP ALL 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 CP ALL Public are associated (or correlated) with Southern BancShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern BancShares PFD has no effect on the direction of CP ALL i.e., CP ALL and Southern BancShares go up and down completely randomly.
Pair Corralation between CP ALL and Southern BancShares
Assuming the 90 days horizon CP ALL Public is expected to generate 2.28 times more return on investment than Southern BancShares. However, CP ALL is 2.28 times more volatile than Southern BancShares PFD. It trades about 0.03 of its potential returns per unit of risk. Southern BancShares PFD is currently generating about 0.01 per unit of risk. If you would invest 192.00 in CP ALL Public on August 29, 2024 and sell it today you would earn a total of 14.00 from holding CP ALL Public or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 82.74% |
| Values | Daily Returns |
CP ALL Public vs. Southern BancShares PFD
Performance |
| Timeline |
| CP ALL Public |
| Southern BancShares PFD |
CP ALL and Southern BancShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CP ALL and Southern BancShares
The main advantage of trading using opposite CP ALL and Southern BancShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CP ALL position performs unexpectedly, Southern BancShares 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 Southern BancShares will offset losses from the drop in Southern BancShares' long position.| CP ALL vs. Itron Inc | CP ALL vs. Omega Healthcare Investors | CP ALL vs. Blacksky Technology | CP ALL vs. Red Cat Holdings |
| Southern BancShares vs. Itron Inc | Southern BancShares vs. Omega Healthcare Investors | Southern BancShares vs. Blacksky Technology | Southern BancShares vs. Red Cat Holdings |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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