Correlation Between Century Financial and Affinity Bancshares
Can any of the company-specific risk be diversified away by investing in both Century Financial and Affinity 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 Century Financial and Affinity Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Financial Corp and Affinity Bancshares, you can compare the effects of market volatilities on Century Financial and Affinity 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 Century Financial with a short position of Affinity Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Financial and Affinity Bancshares.
Diversification Opportunities for Century Financial and Affinity Bancshares
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Century and Affinity is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Century Financial Corp and Affinity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity Bancshares and Century 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 Century Financial Corp are associated (or correlated) with Affinity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity Bancshares has no effect on the direction of Century Financial i.e., Century Financial and Affinity Bancshares go up and down completely randomly.
Pair Corralation between Century Financial and Affinity Bancshares
Given the investment horizon of 90 days Century Financial Corp is expected to generate 2.65 times more return on investment than Affinity Bancshares. However, Century Financial is 2.65 times more volatile than Affinity Bancshares. It trades about 0.24 of its potential returns per unit of risk. Affinity Bancshares is currently generating about 0.08 per unit of risk. If you would invest 3,380 in Century Financial Corp on September 3, 2024 and sell it today you would earn a total of 370.00 from holding Century Financial Corp or generate 10.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Financial Corp vs. Affinity Bancshares
Performance |
| Timeline |
| Century Financial Corp |
| Affinity Bancshares |
Century Financial and Affinity Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Financial and Affinity Bancshares
The main advantage of trading using opposite Century Financial and Affinity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Financial position performs unexpectedly, Affinity 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 Affinity Bancshares will offset losses from the drop in Affinity Bancshares' long position.| Century Financial vs. Eastern Michigan Financial | Century Financial vs. Grand River Commerce | Century Financial vs. Bank of Botetourt | Century Financial vs. FNB Inc |
| Affinity Bancshares vs. Home Federal Bancorp | Affinity Bancshares vs. Magyar Bancorp | Affinity Bancshares vs. Community West Bancshares |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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