Correlation Between Century Financial and Solvay Bank
Can any of the company-specific risk be diversified away by investing in both Century Financial and Solvay Bank 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 Solvay Bank 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 Solvay Bank Corp, you can compare the effects of market volatilities on Century Financial and Solvay Bank 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 Solvay Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Financial and Solvay Bank.
Diversification Opportunities for Century Financial and Solvay Bank
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Century and Solvay is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Century Financial Corp and Solvay Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solvay Bank Corp 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 Solvay Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solvay Bank Corp has no effect on the direction of Century Financial i.e., Century Financial and Solvay Bank go up and down completely randomly.
Pair Corralation between Century Financial and Solvay Bank
Given the investment horizon of 90 days Century Financial Corp is expected to generate 2.07 times more return on investment than Solvay Bank. However, Century Financial is 2.07 times more volatile than Solvay Bank Corp. It trades about 0.25 of its potential returns per unit of risk. Solvay Bank Corp is currently generating about -0.11 per unit of risk. If you would invest 3,339 in Century Financial Corp on August 25, 2024 and sell it today you would earn a total of 410.00 from holding Century Financial Corp or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Financial Corp vs. Solvay Bank Corp
Performance |
| Timeline |
| Century Financial Corp |
| Solvay Bank Corp |
Century Financial and Solvay Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Financial and Solvay Bank
The main advantage of trading using opposite Century Financial and Solvay Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Financial position performs unexpectedly, Solvay Bank 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 Solvay Bank will offset losses from the drop in Solvay Bank'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 |
| Solvay Bank vs. Southern Michigan Bancorp | Solvay Bank vs. Summit Bancshares | Solvay Bank vs. Tri County Financial Group | Solvay Bank vs. QNB Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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