Correlation Between Century Financial and Southern California
Can any of the company-specific risk be diversified away by investing in both Century Financial and Southern California 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 Southern California 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 Southern California Bancorp, you can compare the effects of market volatilities on Century Financial and Southern California 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 Southern California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Financial and Southern California.
Diversification Opportunities for Century Financial and Southern California
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Century and Southern is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Century Financial Corp and Southern California Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern California 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 Southern California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern California has no effect on the direction of Century Financial i.e., Century Financial and Southern California go up and down completely randomly.
Pair Corralation between Century Financial and Southern California
Given the investment horizon of 90 days Century Financial is expected to generate 1.98 times less return on investment than Southern California. But when comparing it to its historical volatility, Century Financial Corp is 1.14 times less risky than Southern California. It trades about 0.24 of its potential returns per unit of risk. Southern California Bancorp is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 1,454 in Southern California Bancorp on September 3, 2024 and sell it today you would earn a total of 338.00 from holding Southern California Bancorp or generate 23.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Financial Corp vs. Southern California Bancorp
Performance |
| Timeline |
| Century Financial Corp |
| Southern California |
Century Financial and Southern California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Financial and Southern California
The main advantage of trading using opposite Century Financial and Southern California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Financial position performs unexpectedly, Southern California 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 California will offset losses from the drop in Southern California's 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 |
| Southern California vs. Avidbank Holdings | Southern California vs. American Riviera Bank | Southern California vs. American Business Bk | Southern California vs. Private Bancorp of |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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