Correlation Between ECB Bancorp and CB Financial
Can any of the company-specific risk be diversified away by investing in both ECB Bancorp and CB Financial 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 ECB Bancorp and CB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECB Bancorp and CB Financial Services, you can compare the effects of market volatilities on ECB Bancorp and CB Financial 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 ECB Bancorp with a short position of CB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECB Bancorp and CB Financial.
Diversification Opportunities for ECB Bancorp and CB Financial
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ECB and CBFV is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ECB Bancorp and CB Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CB Financial Services and ECB Bancorp 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 ECB Bancorp are associated (or correlated) with CB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CB Financial Services has no effect on the direction of ECB Bancorp i.e., ECB Bancorp and CB Financial go up and down completely randomly.
Pair Corralation between ECB Bancorp and CB Financial
Given the investment horizon of 90 days ECB Bancorp is expected to under-perform the CB Financial. But the stock apears to be less risky and, when comparing its historical volatility, ECB Bancorp is 1.2 times less risky than CB Financial. The stock trades about -0.06 of its potential returns per unit of risk. The CB Financial Services is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,823 in CB Financial Services on August 28, 2024 and sell it today you would earn a total of 188.00 from holding CB Financial Services or generate 6.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECB Bancorp vs. CB Financial Services
Performance |
| Timeline |
| ECB Bancorp |
| CB Financial Services |
ECB Bancorp and CB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECB Bancorp and CB Financial
The main advantage of trading using opposite ECB Bancorp and CB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECB Bancorp position performs unexpectedly, CB Financial 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 CB Financial will offset losses from the drop in CB Financial's long position.| ECB Bancorp vs. Home Federal Bancorp | ECB Bancorp vs. Magyar Bancorp | ECB Bancorp vs. Community West Bancshares | ECB Bancorp vs. Lake Shore Bancorp |
| CB Financial vs. Fifth Third Bancorp | CB Financial vs. Zions Bancorporation | CB Financial vs. Huntington Bancshares Incorporated | CB Financial vs. Comerica |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |