Correlation Between Lake Shore and Civista Bancshares
Can any of the company-specific risk be diversified away by investing in both Lake Shore and Civista Bancshares 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 Lake Shore and Civista Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lake Shore Bancorp and Civista Bancshares, you can compare the effects of market volatilities on Lake Shore and Civista Bancshares 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 Lake Shore with a short position of Civista Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Shore and Civista Bancshares.
Diversification Opportunities for Lake Shore and Civista Bancshares
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lake and Civista is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lake Shore Bancorp and Civista Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civista Bancshares and Lake Shore 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 Lake Shore Bancorp are associated (or correlated) with Civista Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civista Bancshares has no effect on the direction of Lake Shore i.e., Lake Shore and Civista Bancshares go up and down completely randomly.
Pair Corralation between Lake Shore and Civista Bancshares
Given the investment horizon of 90 days Lake Shore is expected to generate 4.48 times less return on investment than Civista Bancshares. But when comparing it to its historical volatility, Lake Shore Bancorp is 1.13 times less risky than Civista Bancshares. It trades about 0.07 of its potential returns per unit of risk. Civista Bancshares is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,658 in Civista Bancshares on August 28, 2024 and sell it today you would earn a total of 665.00 from holding Civista Bancshares or generate 40.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.83% |
| Values | Daily Returns |
Lake Shore Bancorp vs. Civista Bancshares
Performance |
| Timeline |
| Lake Shore Bancorp |
| Civista Bancshares |
Lake Shore and Civista Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Shore and Civista Bancshares
The main advantage of trading using opposite Lake Shore and Civista Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Shore position performs unexpectedly, Civista Bancshares 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 Civista Bancshares will offset losses from the drop in Civista Bancshares' long position.| Lake Shore vs. Home Federal Bancorp | Lake Shore vs. Magyar Bancorp | Lake Shore vs. Community West Bancshares |
| Civista Bancshares vs. Fifth Third Bancorp | Civista Bancshares vs. Zions Bancorporation | Civista Bancshares vs. Huntington Bancshares Incorporated | Civista Bancshares vs. Comerica |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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