Correlation Between Ford and CFSB Bancorp
Can any of the company-specific risk be diversified away by investing in both Ford and CFSB Bancorp 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 Ford and CFSB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and CFSB Bancorp, you can compare the effects of market volatilities on Ford and CFSB Bancorp 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 Ford with a short position of CFSB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and CFSB Bancorp.
Diversification Opportunities for Ford and CFSB Bancorp
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and CFSB is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and CFSB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CFSB Bancorp and Ford 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 Ford Motor are associated (or correlated) with CFSB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CFSB Bancorp has no effect on the direction of Ford i.e., Ford and CFSB Bancorp go up and down completely randomly.
Pair Corralation between Ford and CFSB Bancorp
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the CFSB Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.14 times less risky than CFSB Bancorp. The stock trades about -0.06 of its potential returns per unit of risk. The CFSB Bancorp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 775.00 in CFSB Bancorp on December 1, 2024 and sell it today you would lose (1.00) from holding CFSB Bancorp or give up 0.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. CFSB Bancorp
Performance |
| Timeline |
| Ford Motor |
| CFSB Bancorp |
Ford and CFSB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and CFSB Bancorp
The main advantage of trading using opposite Ford and CFSB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, CFSB Bancorp 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 CFSB Bancorp will offset losses from the drop in CFSB Bancorp's long position.The idea behind Ford Motor and CFSB Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CFSB Bancorp vs. IF Bancorp | CFSB Bancorp vs. Home Bancorp | CFSB Bancorp vs. Commerzbank AG PK | CFSB Bancorp vs. ConnectOne Bancorp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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