Correlation Between Potomac Bancshares and CCSB Financial
Can any of the company-specific risk be diversified away by investing in both Potomac Bancshares and CCSB 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 Potomac Bancshares and CCSB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Potomac Bancshares and CCSB Financial Corp, you can compare the effects of market volatilities on Potomac Bancshares and CCSB 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 Potomac Bancshares with a short position of CCSB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Potomac Bancshares and CCSB Financial.
Diversification Opportunities for Potomac Bancshares and CCSB Financial
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Potomac and CCSB is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Potomac Bancshares and CCSB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCSB Financial Corp and Potomac 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 Potomac Bancshares are associated (or correlated) with CCSB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCSB Financial Corp has no effect on the direction of Potomac Bancshares i.e., Potomac Bancshares and CCSB Financial go up and down completely randomly.
Pair Corralation between Potomac Bancshares and CCSB Financial
Given the investment horizon of 90 days Potomac Bancshares is expected to generate 0.8 times more return on investment than CCSB Financial. However, Potomac Bancshares is 1.25 times less risky than CCSB Financial. It trades about 0.06 of its potential returns per unit of risk. CCSB Financial Corp is currently generating about 0.0 per unit of risk. If you would invest 1,426 in Potomac Bancshares on September 1, 2024 and sell it today you would earn a total of 224.00 from holding Potomac Bancshares or generate 15.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Potomac Bancshares vs. CCSB Financial Corp
Performance |
| Timeline |
| Potomac Bancshares |
| CCSB Financial Corp |
Potomac Bancshares and CCSB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Potomac Bancshares and CCSB Financial
The main advantage of trading using opposite Potomac Bancshares and CCSB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Potomac Bancshares position performs unexpectedly, CCSB 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 CCSB Financial will offset losses from the drop in CCSB Financial's long position.| Potomac Bancshares vs. Apollo Bancorp | Potomac Bancshares vs. The Farmers Bank | Potomac Bancshares vs. Community Bankers | Potomac Bancshares vs. CCSB Financial Corp |
| CCSB Financial vs. RCI Hospitality Holdings | CCSB Financial vs. SL Green Realty | CCSB Financial vs. JBG SMITH Properties | CCSB Financial vs. Addus HomeCare |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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