Correlation Between First United and Central Valley
Can any of the company-specific risk be diversified away by investing in both First United and Central Valley 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 Central Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First United and Central Valley Community, you can compare the effects of market volatilities on First United and Central Valley 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 Central Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of First United and Central Valley.
Diversification Opportunities for First United and Central Valley
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Central is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding First United and Central Valley Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Valley Community 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 Central Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Valley Community has no effect on the direction of First United i.e., First United and Central Valley go up and down completely randomly.
Pair Corralation between First United and Central Valley
Given the investment horizon of 90 days First United is expected to generate 0.57 times more return on investment than Central Valley. However, First United is 1.74 times less risky than Central Valley. It trades about 0.09 of its potential returns per unit of risk. Central Valley Community is currently generating about -0.03 per unit of risk. If you would invest 1,820 in First United on August 30, 2024 and sell it today you would earn a total of 1,736 from holding First United or generate 95.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 31.25% |
| Values | Daily Returns |
First United vs. Central Valley Community
Performance |
| Timeline |
| First United |
| Central Valley Community |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First United and Central Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First United and Central Valley
The main advantage of trading using opposite First United and Central Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First United position performs unexpectedly, Central Valley 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 Central Valley will offset losses from the drop in Central Valley'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 |
| Central Valley vs. Home Federal Bancorp | Central Valley vs. First Northwest Bancorp | Central Valley vs. Magyar Bancorp | Central Valley vs. First United |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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