Correlation Between National Bankshares and Civista Bancshares
Can any of the company-specific risk be diversified away by investing in both National Bankshares 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 National Bankshares and Civista Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bankshares and Civista Bancshares, you can compare the effects of market volatilities on National Bankshares 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 National Bankshares with a short position of Civista Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bankshares and Civista Bancshares.
Diversification Opportunities for National Bankshares and Civista Bancshares
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and Civista is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding National Bankshares and Civista Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civista Bancshares and National Bankshares 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 National Bankshares 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 National Bankshares i.e., National Bankshares and Civista Bancshares go up and down completely randomly.
Pair Corralation between National Bankshares and Civista Bancshares
Given the investment horizon of 90 days National Bankshares is expected to under-perform the Civista Bancshares. But the stock apears to be less risky and, when comparing its historical volatility, National Bankshares is 1.31 times less risky than Civista Bancshares. The stock trades about -0.3 of its potential returns per unit of risk. The Civista Bancshares is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 2,144 in Civista Bancshares on November 28, 2024 and sell it today you would lose (61.00) from holding Civista Bancshares or give up 2.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bankshares vs. Civista Bancshares
Performance |
| Timeline |
| National Bankshares |
| Civista Bancshares |
National Bankshares and Civista Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bankshares and Civista Bancshares
The main advantage of trading using opposite National Bankshares and Civista Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bankshares 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.| National Bankshares vs. Finward Bancorp | National Bankshares vs. Community West Bancshares | National Bankshares vs. First Financial Northwest | National Bankshares vs. Oak Valley Bancorp |
| Civista Bancshares vs. Home Federal Bancorp | Civista Bancshares vs. First Financial Northwest | Civista Bancshares vs. First Northwest Bancorp | Civista Bancshares vs. First Capital |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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