Correlation Between Virginia National and CF Financial
Can any of the company-specific risk be diversified away by investing in both Virginia National and CF 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 Virginia National and CF Financial 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 Financial, you can compare the effects of market volatilities on Virginia National and CF 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 Virginia National with a short position of CF Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and CF Financial.
Diversification Opportunities for Virginia National and CF Financial
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virginia and CFFI is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and CF Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Financial 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 Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Financial has no effect on the direction of Virginia National i.e., Virginia National and CF Financial go up and down completely randomly.
Pair Corralation between Virginia National and CF Financial
Given the investment horizon of 90 days Virginia National Bankshares is expected to generate 0.99 times more return on investment than CF Financial. However, Virginia National Bankshares is 1.01 times less risky than CF Financial. It trades about 0.05 of its potential returns per unit of risk. CF Financial is currently generating about 0.04 per unit of risk. If you would invest 2,888 in Virginia National Bankshares on September 1, 2024 and sell it today you would earn a total of 1,194 from holding Virginia National Bankshares or generate 41.34% 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 Financial
Performance |
| Timeline |
| Virginia National |
| CF Financial |
Virginia National and CF Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virginia National and CF Financial
The main advantage of trading using opposite Virginia National and CF Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia National position performs unexpectedly, CF 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 CF Financial will offset losses from the drop in CF Financial's 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 Financial vs. Home Federal Bancorp | CF Financial vs. First Financial Northwest | CF Financial vs. First Northwest Bancorp | CF Financial vs. First Capital |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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