Correlation Between Burke Herbert and CCFNB Bancorp

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

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

Diversification Opportunities for Burke Herbert and CCFNB Bancorp

0.71

Correlation Coefficient

Burke Herbert  CCFNB Bancorp

Poor diversification

The 3 months correlation between Burke and CCFNB is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Burke Herbert Financial and CCFNB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCFNB Bancorp and Burke Herbert 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 Burke Herbert Financial 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 Burke Herbert i.e., Burke Herbert and CCFNB Bancorp go up and down completely randomly.

Pair Corralation between Burke Herbert and CCFNB Bancorp

Given the investment horizon of 90 days Burke Herbert is expected to generate 1.55 times less return on investment than CCFNB Bancorp. In addition to that, Burke Herbert is 1.09 times more volatile than CCFNB Bancorp. It trades about 0.06 of its total potential returns per unit of risk. CCFNB Bancorp is currently generating about 0.1 per unit of volatility. If you would invest  3,407  in CCFNB Bancorp on September 3, 2024 and sell it today you would earn a total of  443.00  from holding CCFNB Bancorp or generate 13.0% return on investment over 90 days.

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

Burke Herbert Financial  vs.  CCFNB Bancorp

Burke Herbert Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Burke Herbert Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Burke Herbert may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CCFNB Bancorp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CCFNB Bancorp are ranked lower than 8 (%) 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 Burke Herbert and CCFNB Bancorp

The main advantage of trading using opposite Burke Herbert and CCFNB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burke Herbert 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 Burke Herbert Financial 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.