Correlation Between CVB Financial and Arthur J

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

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

Diversification Opportunities for CVB Financial and Arthur J

0.72

Correlation Coefficient

CVB Financial  Arthur J

Poor diversification

The 3 months correlation between CVB and Arthur is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial Corp and Arthur J Gallagher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arthur J Gallagher and CVB Financial 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 CVB Financial Corp are associated (or correlated) with Arthur J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arthur J Gallagher has no effect on the direction of CVB Financial i.e., CVB Financial and Arthur J go up and down completely randomly.

Pair Corralation between CVB Financial and Arthur J

Assuming the 90 days horizon CVB Financial Corp is expected to generate 1.55 times more return on investment than Arthur J. However, CVB Financial is 1.55 times more volatile than Arthur J Gallagher. It trades about 0.06 of its potential returns per unit of risk. Arthur J Gallagher is currently generating about 0.04 per unit of risk. If you would invest  1,424  in CVB Financial Corp on October 8, 2024 and sell it today you would earn a total of  596.00  from holding CVB Financial Corp or generate 41.85% return on investment over 90 days.

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

CVB Financial Corp  vs.  Arthur J Gallagher

CVB Financial Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CVB Financial Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CVB Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Arthur J Gallagher

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arthur J Gallagher has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Arthur J is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CVB Financial and Arthur J

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

The idea behind CVB Financial Corp and Arthur J Gallagher 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.