Correlation Between Summit Bancshares and CF Bankshares
Can any of the company-specific risk be diversified away by investing in both Summit Bancshares and CF Bankshares 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 Summit Bancshares and CF Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Bancshares and CF Bankshares, you can compare the effects of market volatilities on Summit Bancshares and CF Bankshares 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 Summit Bancshares with a short position of CF Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Bancshares and CF Bankshares.
Diversification Opportunities for Summit Bancshares and CF Bankshares
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and CFBK is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Summit Bancshares and CF Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Bankshares and Summit 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 Summit Bancshares are associated (or correlated) with CF Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Bankshares has no effect on the direction of Summit Bancshares i.e., Summit Bancshares and CF Bankshares go up and down completely randomly.
Pair Corralation between Summit Bancshares and CF Bankshares
Given the investment horizon of 90 days Summit Bancshares is expected to generate 3.61 times less return on investment than CF Bankshares. But when comparing it to its historical volatility, Summit Bancshares is 1.53 times less risky than CF Bankshares. It trades about 0.06 of its potential returns per unit of risk. CF Bankshares is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,831 in CF Bankshares on September 3, 2024 and sell it today you would earn a total of 991.00 from holding CF Bankshares or generate 54.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.83% |
| Values | Daily Returns |
Summit Bancshares vs. CF Bankshares
Performance |
| Timeline |
| Summit Bancshares |
| CF Bankshares |
Summit Bancshares and CF Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Bancshares and CF Bankshares
The main advantage of trading using opposite Summit Bancshares and CF Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Bancshares position performs unexpectedly, CF Bankshares 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 CF Bankshares will offset losses from the drop in CF Bankshares' long position.| Summit Bancshares vs. First Hawaiian | Summit Bancshares vs. Central Pacific Financial | Summit Bancshares vs. Territorial Bancorp | Summit Bancshares vs. Comerica |
| CF Bankshares vs. JPMorgan Chase Co | CF Bankshares vs. Citigroup | CF Bankshares vs. Wells Fargo | CF Bankshares vs. Toronto Dominion 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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