Correlation Between Parke Bancorp and CB Financial
Can any of the company-specific risk be diversified away by investing in both Parke Bancorp and CB 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 Parke Bancorp and CB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parke Bancorp and CB Financial Services, you can compare the effects of market volatilities on Parke Bancorp and CB 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 Parke Bancorp with a short position of CB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parke Bancorp and CB Financial.
Diversification Opportunities for Parke Bancorp and CB Financial
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Parke and CBFV is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Parke Bancorp and CB Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CB Financial Services and Parke Bancorp 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 Parke Bancorp are associated (or correlated) with CB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CB Financial Services has no effect on the direction of Parke Bancorp i.e., Parke Bancorp and CB Financial go up and down completely randomly.
Pair Corralation between Parke Bancorp and CB Financial
Given the investment horizon of 90 days Parke Bancorp is expected to generate 1.25 times more return on investment than CB Financial. However, Parke Bancorp is 1.25 times more volatile than CB Financial Services. It trades about 0.28 of its potential returns per unit of risk. CB Financial Services is currently generating about 0.29 per unit of risk. If you would invest 2,131 in Parke Bancorp on August 28, 2024 and sell it today you would earn a total of 241.00 from holding Parke Bancorp or generate 11.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parke Bancorp vs. CB Financial Services
Performance |
| Timeline |
| Parke Bancorp |
| CB Financial Services |
Parke Bancorp and CB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parke Bancorp and CB Financial
The main advantage of trading using opposite Parke Bancorp and CB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parke Bancorp position performs unexpectedly, CB 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 CB Financial will offset losses from the drop in CB Financial's long position.| Parke Bancorp vs. Sound Financial Bancorp | Parke Bancorp vs. Finward Bancorp | Parke Bancorp vs. Franklin Financial Services | Parke Bancorp vs. Community West Bancshares |
| CB Financial vs. Fifth Third Bancorp | CB Financial vs. Huntington Bancshares Incorporated | CB Financial vs. MT Bank |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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