Correlation Between Century Financial and 1ST SUMMIT
Can any of the company-specific risk be diversified away by investing in both Century Financial and 1ST SUMMIT 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 1ST SUMMIT 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 1ST SUMMIT BANCORP, you can compare the effects of market volatilities on Century Financial and 1ST SUMMIT 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 1ST SUMMIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Financial and 1ST SUMMIT.
Diversification Opportunities for Century Financial and 1ST SUMMIT
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Century and 1ST is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Century Financial Corp and 1ST SUMMIT BANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1ST SUMMIT BANCORP 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 1ST SUMMIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1ST SUMMIT BANCORP has no effect on the direction of Century Financial i.e., Century Financial and 1ST SUMMIT go up and down completely randomly.
Pair Corralation between Century Financial and 1ST SUMMIT
Given the investment horizon of 90 days Century Financial Corp is expected to generate 3.74 times more return on investment than 1ST SUMMIT. However, Century Financial is 3.74 times more volatile than 1ST SUMMIT BANCORP. It trades about 0.24 of its potential returns per unit of risk. 1ST SUMMIT BANCORP 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Financial Corp vs. 1ST SUMMIT BANCORP
Performance |
| Timeline |
| Century Financial Corp |
| 1ST SUMMIT BANCORP |
Century Financial and 1ST SUMMIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Financial and 1ST SUMMIT
The main advantage of trading using opposite Century Financial and 1ST SUMMIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Financial position performs unexpectedly, 1ST SUMMIT 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 1ST SUMMIT will offset losses from the drop in 1ST SUMMIT'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 |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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