Correlation Between First Horizon and CF Bankshares
Can any of the company-specific risk be diversified away by investing in both First Horizon 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 First Horizon and CF Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Horizon National and CF Bankshares, you can compare the effects of market volatilities on First Horizon 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 First Horizon with a short position of CF Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Horizon and CF Bankshares.
Diversification Opportunities for First Horizon and CF Bankshares
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and CFBK is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding First Horizon National and CF Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Bankshares and First Horizon 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 First Horizon National 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 First Horizon i.e., First Horizon and CF Bankshares go up and down completely randomly.
Pair Corralation between First Horizon and CF Bankshares
Considering the 90-day investment horizon First Horizon is expected to generate 1.04 times less return on investment than CF Bankshares. In addition to that, First Horizon is 1.05 times more volatile than CF Bankshares. It trades about 0.17 of its total potential returns per unit of risk. CF Bankshares is currently generating about 0.19 per unit of volatility. If you would invest 2,130 in CF Bankshares on September 2, 2024 and sell it today you would earn a total of 692.00 from holding CF Bankshares or generate 32.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Horizon National vs. CF Bankshares
Performance |
| Timeline |
| First Horizon National |
| CF Bankshares |
First Horizon and CF Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Horizon and CF Bankshares
The main advantage of trading using opposite First Horizon and CF Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Horizon 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.| First Horizon vs. Zions Bancorporation | First Horizon vs. KeyCorp | First Horizon vs. Comerica | First Horizon vs. Western Alliance Bancorporation |
| CF Bankshares vs. Affinity Bancshares | CF Bankshares vs. Auburn National Bancorporation | CF Bankshares vs. First Community | CF Bankshares vs. LINKBANCORP |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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