Correlation Between CNB Financial and Univest Pennsylvania

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

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

Diversification Opportunities for CNB Financial and Univest Pennsylvania

0.94

Correlation Coefficient

CNB Financial  Univest Pennsylvania

Almost no diversification

The 3 months correlation between CNB and Univest is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding CNB Financial and Univest Pennsylvania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Univest Pennsylvania and CNB 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 CNB Financial are associated (or correlated) with Univest Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Univest Pennsylvania has no effect on the direction of CNB Financial i.e., CNB Financial and Univest Pennsylvania go up and down completely randomly.

Pair Corralation between CNB Financial and Univest Pennsylvania

Given the investment horizon of 90 days CNB Financial is expected to under-perform the Univest Pennsylvania. But the stock apears to be less risky and, when comparing its historical volatility, CNB Financial is 1.18 times less risky than Univest Pennsylvania. The stock trades about -0.12 of its potential returns per unit of risk. The Univest Pennsylvania is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,949  in Univest Pennsylvania on December 19, 2024 and sell it today you would lose (105.00) from holding Univest Pennsylvania or give up 3.56% of portfolio value over 90 days.

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

CNB Financial  vs.  Univest Pennsylvania

CNB Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days CNB Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Univest Pennsylvania

Risk-Adjusted Performance

Very Weak

Over the last 90 days Univest Pennsylvania has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Univest Pennsylvania is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with CNB Financial and Univest Pennsylvania

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

The idea behind CNB Financial and Univest Pennsylvania 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.