Correlation Between Alpine Banks and CCFNB Bancorp

Can any of the company-specific risk be diversified away by investing in both Alpine Banks and CCFNB Bancorp 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 Alpine Banks and CCFNB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Alpine Banks and CCFNB Bancorp

0.87

Correlation Coefficient

Alpine Banks  CCFNB Bancorp

Very poor diversification

The 3 months correlation between Alpine and CCFNB is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Alpine Banks of and CCFNB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCFNB Bancorp and Alpine Banks 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 Alpine Banks of are associated (or correlated) with CCFNB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCFNB Bancorp has no effect on the direction of Alpine Banks i.e., Alpine Banks and CCFNB Bancorp go up and down completely randomly.

Pair Corralation between Alpine Banks and CCFNB Bancorp

Assuming the 90 days horizon Alpine Banks is expected to generate 4.9 times less return on investment than CCFNB Bancorp. But when comparing it to its historical volatility, Alpine Banks of is 6.35 times less risky than CCFNB Bancorp. It trades about 0.34 of its potential returns per unit of risk. CCFNB Bancorp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,662  in CCFNB Bancorp on October 4, 2024 and sell it today you would earn a total of  528.00  from holding CCFNB Bancorp or generate 14.42% return on investment over 90 days.

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

Alpine Banks of  vs.  CCFNB Bancorp

Alpine Banks

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Alpine Banks of are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Alpine Banks sustained solid returns over the last few months and may actually be approaching a breakup point.

CCFNB Bancorp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CCFNB Bancorp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, CCFNB Bancorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpine Banks and CCFNB Bancorp

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

The idea behind Alpine Banks of and CCFNB 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.