Correlation Between Eastern Bankshares and CF Bankshares
Can any of the company-specific risk be diversified away by investing in both Eastern Bankshares and CF Bankshares 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 Eastern Bankshares and CF Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Bankshares and CF Bankshares, you can compare the effects of market volatilities on Eastern Bankshares and CF Bankshares 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 Eastern Bankshares with a short position of CF Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Bankshares and CF Bankshares.
Diversification Opportunities for Eastern Bankshares and CF Bankshares
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastern and CFBK is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Bankshares and CF Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Bankshares and Eastern Bankshares 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 Eastern Bankshares are associated (or correlated) with CF Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Bankshares has no effect on the direction of Eastern Bankshares i.e., Eastern Bankshares and CF Bankshares go up and down completely randomly.
Pair Corralation between Eastern Bankshares and CF Bankshares
Considering the 90-day investment horizon Eastern Bankshares is expected to generate 1.55 times less return on investment than CF Bankshares. But when comparing it to its historical volatility, Eastern Bankshares is 1.26 times less risky than CF Bankshares. It trades about 0.06 of its potential returns per unit of risk. CF Bankshares is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,124 in CF Bankshares on November 2, 2024 and sell it today you would earn a total of 369.00 from holding CF Bankshares or generate 17.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Bankshares vs. CF Bankshares
Performance |
| Timeline |
| Eastern Bankshares |
| CF Bankshares |
Eastern Bankshares and CF Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Bankshares and CF Bankshares
The main advantage of trading using opposite Eastern Bankshares and CF Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Bankshares position performs unexpectedly, CF Bankshares 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 CF Bankshares will offset losses from the drop in CF Bankshares' long position.| Eastern Bankshares vs. Western New England | Eastern Bankshares vs. Northeast Community Bancorp | Eastern Bankshares vs. Independent Bank | Eastern Bankshares vs. The First Bancshares, |
| CF Bankshares vs. Magyar Bancorp | CF Bankshares vs. Home Federal Bancorp | CF Bankshares vs. Community West Bancshares | CF Bankshares vs. First Financial Northwest |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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