Correlation Between First Ottawa and Century Next
Can any of the company-specific risk be diversified away by investing in both First Ottawa and Century Next 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 Ottawa and Century Next into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Ottawa Bancshares and Century Next Financial, you can compare the effects of market volatilities on First Ottawa and Century Next 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 Ottawa with a short position of Century Next. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Ottawa and Century Next.
Diversification Opportunities for First Ottawa and Century Next
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Century is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding First Ottawa Bancshares and Century Next Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Next Financial and First Ottawa 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 Ottawa Bancshares are associated (or correlated) with Century Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Next Financial has no effect on the direction of First Ottawa i.e., First Ottawa and Century Next go up and down completely randomly.
Pair Corralation between First Ottawa and Century Next
Given the investment horizon of 90 days First Ottawa is expected to generate 1.56 times less return on investment than Century Next. But when comparing it to its historical volatility, First Ottawa Bancshares is 1.02 times less risky than Century Next. It trades about 0.04 of its potential returns per unit of risk. Century Next Financial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,899 in Century Next Financial on August 25, 2024 and sell it today you would earn a total of 973.00 from holding Century Next Financial or generate 33.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 86.08% |
| Values | Daily Returns |
First Ottawa Bancshares vs. Century Next Financial
Performance |
| Timeline |
| First Ottawa Bancshares |
| Century Next Financial |
First Ottawa and Century Next Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Ottawa and Century Next
The main advantage of trading using opposite First Ottawa and Century Next positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Ottawa position performs unexpectedly, Century Next 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 Century Next will offset losses from the drop in Century Next's long position.| First Ottawa vs. Century Next Financial | First Ottawa vs. Citizens Financial Corp | First Ottawa vs. Triad Business Bank | First Ottawa vs. First Bankers Trustshares |
| Century Next vs. Citizens Financial Corp | Century Next vs. Triad Business Bank | Century Next vs. First Ottawa Bancshares | Century Next vs. CCSB Financial 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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