Correlation Between CB Financial and Taylor Calvin

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

By analyzing existing cross correlation between CB Financial Services and Taylor Calvin B, you can compare the effects of market volatilities on CB Financial and Taylor Calvin 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 CB Financial with a short position of Taylor Calvin. Check out your portfolio center. Please also check ongoing floating volatility patterns of CB Financial and Taylor Calvin.

Diversification Opportunities for CB Financial and Taylor Calvin

0.04

Correlation Coefficient

CB Financial  Taylor Calvin

Significant diversification

The 3 months correlation between CBFV and Taylor is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding CB Financial Services and Taylor Calvin B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taylor Calvin B and CB 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 CB Financial Services are associated (or correlated) with Taylor Calvin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taylor Calvin B has no effect on the direction of CB Financial i.e., CB Financial and Taylor Calvin go up and down completely randomly.

Pair Corralation between CB Financial and Taylor Calvin

Given the investment horizon of 90 days CB Financial Services is expected to generate 1.14 times more return on investment than Taylor Calvin. However, CB Financial is 1.14 times more volatile than Taylor Calvin B. It trades about 0.22 of its potential returns per unit of risk. Taylor Calvin B is currently generating about 0.04 per unit of risk. If you would invest  2,593  in CB Financial Services on September 3, 2024 and sell it today you would earn a total of  606.00  from holding CB Financial Services or generate 23.37% return on investment over 90 days.

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

CB Financial Services  vs.  Taylor Calvin B

CB Financial Services

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CB Financial Services are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, CB Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Taylor Calvin B

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Taylor Calvin B are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Taylor Calvin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CB Financial and Taylor Calvin

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

The idea behind CB Financial Services and Taylor Calvin B 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.