Correlation Between Heritage Commerce and CF Bankshares
Can any of the company-specific risk be diversified away by investing in both Heritage Commerce 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 Heritage Commerce and CF Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heritage Commerce Corp and CF Bankshares, you can compare the effects of market volatilities on Heritage Commerce 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 Heritage Commerce with a short position of CF Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Commerce and CF Bankshares.
Diversification Opportunities for Heritage Commerce and CF Bankshares
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Heritage and CFBK is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Commerce Corp and CF Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Bankshares and Heritage Commerce 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 Heritage Commerce Corp 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 Heritage Commerce i.e., Heritage Commerce and CF Bankshares go up and down completely randomly.
Pair Corralation between Heritage Commerce and CF Bankshares
Given the investment horizon of 90 days Heritage Commerce is expected to generate 3.94 times less return on investment than CF Bankshares. In addition to that, Heritage Commerce is 1.2 times more volatile than CF Bankshares. It trades about 0.01 of its total potential returns per unit of risk. CF Bankshares is currently generating about 0.05 per unit of volatility. If you would invest 2,041 in CF Bankshares on September 1, 2024 and sell it today you would earn a total of 781.00 from holding CF Bankshares or generate 38.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.9% |
| Values | Daily Returns |
Heritage Commerce Corp vs. CF Bankshares
Performance |
| Timeline |
| Heritage Commerce Corp |
| CF Bankshares |
Heritage Commerce and CF Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heritage Commerce and CF Bankshares
The main advantage of trading using opposite Heritage Commerce and CF Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Commerce 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.| Heritage Commerce vs. Home Federal Bancorp | Heritage Commerce vs. First Financial Northwest | Heritage Commerce vs. First Northwest Bancorp | Heritage Commerce vs. First Capital |
| CF Bankshares vs. Affinity Bancshares | CF Bankshares vs. Southern California Bancorp | CF Bankshares vs. Auburn National Bancorporation | CF Bankshares vs. BayCom 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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