Correlation Between Southern States and CB Financial
Can any of the company-specific risk be diversified away by investing in both Southern States 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 Southern States and CB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern States Bancshares and CB Financial Services, you can compare the effects of market volatilities on Southern States 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 Southern States with a short position of CB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern States and CB Financial.
Diversification Opportunities for Southern States and CB Financial
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Southern and CBFV is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Southern States Bancshares 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 Southern States 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 Southern States Bancshares 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 Southern States i.e., Southern States and CB Financial go up and down completely randomly.
Pair Corralation between Southern States and CB Financial
Given the investment horizon of 90 days Southern States is expected to generate 1.18 times less return on investment than CB Financial. In addition to that, Southern States is 1.2 times more volatile than CB Financial Services. It trades about 0.04 of its total potential returns per unit of risk. CB Financial Services is currently generating about 0.05 per unit of volatility. If you would invest 2,086 in CB Financial Services on August 25, 2024 and sell it today you would earn a total of 914.00 from holding CB Financial Services or generate 43.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Southern States Bancshares vs. CB Financial Services
Performance |
| Timeline |
| Southern States Banc |
| CB Financial Services |
Southern States and CB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern States and CB Financial
The main advantage of trading using opposite Southern States and CB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern States 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.| Southern States vs. Home Federal Bancorp | Southern States vs. Oak Valley Bancorp | Southern States vs. Mainstreet Bank | Southern States vs. Chemung Financial Corp |
| CB Financial vs. Fifth Third Bancorp | CB Financial vs. Zions Bancorporation | CB Financial vs. Huntington Bancshares Incorporated | CB Financial vs. PNC Financial Services |
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 Stocks Directory module to find actively traded stocks across global markets.
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