Correlation Between First United and CNB Financial
Can any of the company-specific risk be diversified away by investing in both First United and CNB 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 First United and CNB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First United and CNB Financial, you can compare the effects of market volatilities on First United and CNB 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 First United with a short position of CNB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First United and CNB Financial.
Diversification Opportunities for First United and CNB Financial
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and CNB is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding First United and CNB Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNB Financial and First United 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 United are associated (or correlated) with CNB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNB Financial has no effect on the direction of First United i.e., First United and CNB Financial go up and down completely randomly.
Pair Corralation between First United and CNB Financial
Given the investment horizon of 90 days First United is expected to generate 0.69 times more return on investment than CNB Financial. However, First United is 1.45 times less risky than CNB Financial. It trades about 0.18 of its potential returns per unit of risk. CNB Financial is currently generating about 0.06 per unit of risk. If you would invest 1,775 in First United on September 14, 2024 and sell it today you would earn a total of 1,781 from holding First United or generate 100.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First United vs. CNB Financial
Performance |
| Timeline |
| First United |
| CNB Financial |
First United and CNB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First United and CNB Financial
The main advantage of trading using opposite First United and CNB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First United position performs unexpectedly, CNB 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 CNB Financial will offset losses from the drop in CNB Financial's long position.| First United vs. First Community | First United vs. Greene County Bancorp | First United vs. Community West Bancshares | First United vs. Affinity Bancshares |
| CNB Financial vs. Finward Bancorp | CNB Financial vs. Great Southern Bancorp | CNB Financial vs. First Mid Illinois | CNB Financial vs. Franklin Financial Services |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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