Correlation Between CF Bankshares and SVB T

Can any of the company-specific risk be diversified away by investing in both CF Bankshares and SVB T 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 CF Bankshares and SVB T into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CF Bankshares and SVB T Corp, you can compare the effects of market volatilities on CF Bankshares and SVB T 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 CF Bankshares with a short position of SVB T. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Bankshares and SVB T.

Diversification Opportunities for CF Bankshares and SVB T

0.51

Correlation Coefficient

CF Bankshares  SVB T

Very weak diversification

The 3 months correlation between CFBK and SVB is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CF Bankshares and SVB T Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVB T Corp and CF Bankshares 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 CF Bankshares are associated (or correlated) with SVB T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVB T Corp has no effect on the direction of CF Bankshares i.e., CF Bankshares and SVB T go up and down completely randomly.

Pair Corralation between CF Bankshares and SVB T

Given the investment horizon of 90 days CF Bankshares is expected to generate 4.43 times more return on investment than SVB T. However, CF Bankshares is 4.43 times more volatile than SVB T Corp. It trades about 0.19 of its potential returns per unit of risk. SVB T Corp is currently generating about 0.16 per unit of risk. If you would invest  2,130  in CF Bankshares on September 2, 2024 and sell it today you would earn a total of  692.00  from holding CF Bankshares or generate 32.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

CF Bankshares  vs.  SVB T Corp

CF Bankshares

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CF Bankshares are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental drivers, CF Bankshares disclosed solid returns over the last few months and may actually be approaching a breakup point.

SVB T Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SVB T Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, SVB T is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CF Bankshares and SVB T

The main advantage of trading using opposite CF Bankshares and SVB T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Bankshares position performs unexpectedly, SVB T 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 SVB T will offset losses from the drop in SVB T's long position.

The idea behind CF Bankshares and SVB T Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.