Correlation Between Prosperity Bancshares and Civista Bancshares
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares 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 Prosperity Bancshares and Civista Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and Civista Bancshares, you can compare the effects of market volatilities on Prosperity Bancshares 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 Prosperity Bancshares with a short position of Civista Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and Civista Bancshares.
Diversification Opportunities for Prosperity Bancshares and Civista Bancshares
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Prosperity and Civista is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and Civista Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civista Bancshares and Prosperity Bancshares 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 Prosperity Bancshares 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 Prosperity Bancshares i.e., Prosperity Bancshares and Civista Bancshares go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and Civista Bancshares
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 1.88 times less return on investment than Civista Bancshares. But when comparing it to its historical volatility, Prosperity Bancshares is 1.17 times less risky than Civista Bancshares. It trades about 0.23 of its potential returns per unit of risk. Civista Bancshares is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,808 in Civista Bancshares on August 24, 2024 and sell it today you would earn a total of 446.00 from holding Civista Bancshares or generate 24.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosperity Bancshares vs. Civista Bancshares
Performance |
| Timeline |
| Prosperity Bancshares |
| Civista Bancshares |
Prosperity Bancshares and Civista Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and Civista Bancshares
The main advantage of trading using opposite Prosperity Bancshares and Civista Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares 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.| Prosperity Bancshares vs. Banco Bradesco SA | Prosperity Bancshares vs. Itau Unibanco Banco | Prosperity Bancshares vs. Banco Santander Brasil | Prosperity Bancshares vs. Western Alliance Bancorporation |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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