Correlation Between Community Trust and Primis Financial

Can any of the company-specific risk be diversified away by investing in both Community Trust and Primis 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 Community Trust and Primis Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Community Trust and Primis Financial

0.73

Correlation Coefficient

Community Trust  Primis Financial

Poor diversification

The 3 months correlation between Community and Primis is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Community Trust Bancorp and Primis Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primis Financial Corp and Community Trust 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 Community Trust Bancorp are associated (or correlated) with Primis Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primis Financial Corp has no effect on the direction of Community Trust i.e., Community Trust and Primis Financial go up and down completely randomly.

Pair Corralation between Community Trust and Primis Financial

Given the investment horizon of 90 days Community Trust Bancorp is expected to generate 1.07 times more return on investment than Primis Financial. However, Community Trust is 1.07 times more volatile than Primis Financial Corp. It trades about 0.14 of its potential returns per unit of risk. Primis Financial Corp is currently generating about 0.08 per unit of risk. If you would invest  4,751  in Community Trust Bancorp on September 12, 2024 and sell it today you would earn a total of  1,147  from holding Community Trust Bancorp or generate 24.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Community Trust Bancorp  vs.  Primis Financial Corp

Community Trust Bancorp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Community Trust Bancorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental drivers, Community Trust demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Primis Financial Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Primis Financial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Primis Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Community Trust and Primis Financial

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

The idea behind Community Trust Bancorp and Primis Financial 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.