Correlation Between Provident Financial and Capitol Federal

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Provident Financial and Capitol Federal 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 Provident Financial and Capitol Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Provident Financial Services and Capitol Federal Financial, you can compare the effects of market volatilities on Provident Financial and Capitol Federal 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 Provident Financial with a short position of Capitol Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Provident Financial and Capitol Federal.

Diversification Opportunities for Provident Financial and Capitol Federal

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Provident and Capitol is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Provident Financial Services and Capitol Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Federal Financial and Provident Financial 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 Provident Financial Services are associated (or correlated) with Capitol Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Federal Financial has no effect on the direction of Provident Financial i.e., Provident Financial and Capitol Federal go up and down completely randomly.

Pair Corralation between Provident Financial and Capitol Federal

Assuming the 90 days horizon Provident Financial Services is expected to under-perform the Capitol Federal. But the stock apears to be less risky and, when comparing its historical volatility, Provident Financial Services is 1.38 times less risky than Capitol Federal. The stock trades about -0.06 of its potential returns per unit of risk. The Capitol Federal Financial is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  625.00  in Capitol Federal Financial on September 9, 2024 and sell it today you would lose (15.00) from holding Capitol Federal Financial or give up 2.4% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Provident Financial Services  vs.  Capitol Federal Financial

 Performance 
       Timeline  
Provident Financial 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Provident Financial Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Provident Financial reported solid returns over the last few months and may actually be approaching a breakup point.
Capitol Federal Financial 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Federal Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Capitol Federal reported solid returns over the last few months and may actually be approaching a breakup point.

Provident Financial and Capitol Federal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Provident Financial and Capitol Federal

The main advantage of trading using opposite Provident Financial and Capitol Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Provident Financial position performs unexpectedly, Capitol Federal 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 Capitol Federal will offset losses from the drop in Capitol Federal's long position.
The idea behind Provident Financial Services and Capitol Federal Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

Other Complementary Tools

USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Fundamental Analysis
View fundamental data based on most recent published financial statements