Correlation Between Northeast Community and Century Financial
Can any of the company-specific risk be diversified away by investing in both Northeast Community and Century 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 Northeast Community and Century Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northeast Community Bancorp and Century Financial Corp, you can compare the effects of market volatilities on Northeast Community and Century 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 Northeast Community with a short position of Century Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northeast Community and Century Financial.
Diversification Opportunities for Northeast Community and Century Financial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northeast and Century is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Northeast Community Bancorp and Century Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Financial Corp and Northeast Community 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 Northeast Community Bancorp are associated (or correlated) with Century Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Financial Corp has no effect on the direction of Northeast Community i.e., Northeast Community and Century Financial go up and down completely randomly.
Pair Corralation between Northeast Community and Century Financial
Given the investment horizon of 90 days Northeast Community Bancorp is expected to generate 1.16 times more return on investment than Century Financial. However, Northeast Community is 1.16 times more volatile than Century Financial Corp. It trades about 0.29 of its potential returns per unit of risk. Century Financial Corp is currently generating about 0.26 per unit of risk. If you would invest 2,596 in Northeast Community Bancorp on September 1, 2024 and sell it today you would earn a total of 419.00 from holding Northeast Community Bancorp or generate 16.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northeast Community Bancorp vs. Century Financial Corp
Performance |
| Timeline |
| Northeast Community |
| Century Financial Corp |
Northeast Community and Century Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northeast Community and Century Financial
The main advantage of trading using opposite Northeast Community and Century Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northeast Community position performs unexpectedly, Century 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 Century Financial will offset losses from the drop in Century Financial's long position.| Northeast Community vs. Community West Bancshares | Northeast Community vs. First Financial Northwest | Northeast Community vs. First Capital | Northeast Community vs. HomeTrust Bancshares |
| Century Financial vs. Eastern Michigan Financial | Century Financial vs. Grand River Commerce | Century Financial vs. Bank of Botetourt | Century Financial vs. FNB Inc |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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