Correlation Between Central Pacific and Coeur DAlene

Can any of the company-specific risk be diversified away by investing in both Central Pacific and Coeur DAlene 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 Central Pacific and Coeur DAlene into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Central Pacific Financial and Coeur dAlene Bancorp, you can compare the effects of market volatilities on Central Pacific and Coeur DAlene 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 Central Pacific with a short position of Coeur DAlene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Pacific and Coeur DAlene.

Diversification Opportunities for Central Pacific and Coeur DAlene

0.63

Correlation Coefficient

Central Pacific  Coeur DAlene

Poor diversification

The 3 months correlation between Central and Coeur is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Central Pacific Financial and Coeur dAlene Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coeur dAlene Bancorp and Central Pacific 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 Central Pacific Financial are associated (or correlated) with Coeur DAlene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coeur dAlene Bancorp has no effect on the direction of Central Pacific i.e., Central Pacific and Coeur DAlene go up and down completely randomly.

Pair Corralation between Central Pacific and Coeur DAlene

Considering the 90-day investment horizon Central Pacific Financial is expected to generate 1.66 times more return on investment than Coeur DAlene. However, Central Pacific is 1.66 times more volatile than Coeur dAlene Bancorp. It trades about 0.09 of its potential returns per unit of risk. Coeur dAlene Bancorp is currently generating about 0.11 per unit of risk. If you would invest  2,783  in Central Pacific Financial on September 3, 2024 and sell it today you would earn a total of  409.00  from holding Central Pacific Financial or generate 14.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Central Pacific Financial  vs.  Coeur dAlene Bancorp

Central Pacific Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Central Pacific Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Central Pacific reported solid returns over the last few months and may actually be approaching a breakup point.

Coeur dAlene Bancorp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coeur dAlene Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Coeur DAlene may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Central Pacific and Coeur DAlene

The main advantage of trading using opposite Central Pacific and Coeur DAlene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Pacific position performs unexpectedly, Coeur DAlene 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 Coeur DAlene will offset losses from the drop in Coeur DAlene's long position.

The idea behind Central Pacific Financial and Coeur dAlene Bancorp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.