Correlation Between Summit Bancshares and Capitol Federal
Can any of the company-specific risk be diversified away by investing in both Summit Bancshares 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 Summit Bancshares and Capitol Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Bancshares and Capitol Federal Financial, you can compare the effects of market volatilities on Summit Bancshares 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 Summit Bancshares with a short position of Capitol Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Bancshares and Capitol Federal.
Diversification Opportunities for Summit Bancshares and Capitol Federal
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Summit and Capitol is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Summit Bancshares 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 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 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 Summit Bancshares i.e., Summit Bancshares and Capitol Federal go up and down completely randomly.
Pair Corralation between Summit Bancshares and Capitol Federal
Given the investment horizon of 90 days Summit Bancshares is expected to generate 1.06 times more return on investment than Capitol Federal. However, Summit Bancshares is 1.06 times more volatile than Capitol Federal Financial. It trades about 0.04 of its potential returns per unit of risk. Capitol Federal Financial is currently generating about -0.01 per unit of risk. If you would invest 3,444 in Summit Bancshares on October 7, 2024 and sell it today you would earn a total of 1,047 from holding Summit Bancshares or generate 30.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 69.76% |
| Values | Daily Returns |
Summit Bancshares vs. Capitol Federal Financial
Performance |
| Timeline |
| Summit Bancshares |
| Capitol Federal Financial |
Summit Bancshares and Capitol Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Bancshares and Capitol Federal
The main advantage of trading using opposite Summit Bancshares and Capitol Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Bancshares 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.| Summit Bancshares vs. Pioneer Bankcorp | Summit Bancshares vs. Liberty Northwest Bancorp | Summit Bancshares vs. First Community | Summit Bancshares vs. Coeur dAlene Bancorp |
| Capitol Federal vs. Independent Bank | Capitol Federal vs. BankFinancial | Capitol Federal vs. Business First Bancshares | Capitol Federal vs. First Bancorp |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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