Correlation Between CF Bankshares and Investar Holding

Can any of the company-specific risk be diversified away by investing in both CF Bankshares and Investar Holding 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 CF Bankshares and Investar Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CF Bankshares and Investar Holding Corp, you can compare the effects of market volatilities on CF Bankshares and Investar Holding 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 CF Bankshares with a short position of Investar Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Bankshares and Investar Holding.

Diversification Opportunities for CF Bankshares and Investar Holding

0.63

Correlation Coefficient

CF Bankshares  Investar Holding

Poor diversification

The 3 months correlation between CFBK and Investar is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding CF Bankshares and Investar Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investar Holding Corp and CF Bankshares 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 CF Bankshares are associated (or correlated) with Investar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investar Holding Corp has no effect on the direction of CF Bankshares i.e., CF Bankshares and Investar Holding go up and down completely randomly.

Pair Corralation between CF Bankshares and Investar Holding

Given the investment horizon of 90 days CF Bankshares is expected to generate 1.08 times more return on investment than Investar Holding. However, CF Bankshares is 1.08 times more volatile than Investar Holding Corp. It trades about -0.11 of its potential returns per unit of risk. Investar Holding Corp is currently generating about -0.19 per unit of risk. If you would invest  2,517  in CF Bankshares on December 28, 2024 and sell it today you would lose (298.00) from holding CF Bankshares or give up 11.84% of portfolio value over 90 days.

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

CF Bankshares  vs.  Investar Holding Corp

CF Bankshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days CF Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Investar Holding Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Investar Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with CF Bankshares and Investar Holding

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

The idea behind CF Bankshares and Investar Holding Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.