Correlation Between Virginia National and CF Bankshares
Can any of the company-specific risk be diversified away by investing in both Virginia National 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 Virginia National and CF Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virginia National Bankshares and CF Bankshares, you can compare the effects of market volatilities on Virginia National 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 Virginia National with a short position of CF Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and CF Bankshares.
Diversification Opportunities for Virginia National and CF Bankshares
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virginia and CFBK is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and CF Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Bankshares and Virginia National 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 Virginia National Bankshares 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 Virginia National i.e., Virginia National and CF Bankshares go up and down completely randomly.
Pair Corralation between Virginia National and CF Bankshares
Given the investment horizon of 90 days Virginia National is expected to generate 2.4 times less return on investment than CF Bankshares. But when comparing it to its historical volatility, Virginia National Bankshares is 1.55 times less risky than CF Bankshares. It trades about 0.15 of its potential returns per unit of risk. CF Bankshares is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,466 in CF Bankshares on August 31, 2024 and sell it today you would earn a total of 334.00 from holding CF Bankshares or generate 13.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virginia National Bankshares vs. CF Bankshares
Performance |
| Timeline |
| Virginia National |
| CF Bankshares |
Virginia National and CF Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virginia National and CF Bankshares
The main advantage of trading using opposite Virginia National and CF Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia National 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.| Virginia National vs. Finward Bancorp | Virginia National vs. Community West Bancshares | Virginia National vs. First Financial Northwest | Virginia National vs. Oak Valley Bancorp |
| CF Bankshares vs. KeyCorp | CF Bankshares vs. Comerica | CF Bankshares vs. First Horizon National | CF Bankshares vs. Western Alliance Bancorporation |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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