Correlation Between CF Bankshares and Natwest Group
Can any of the company-specific risk be diversified away by investing in both CF Bankshares and Natwest Group 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 Natwest Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CF Bankshares and Natwest Group PLC, you can compare the effects of market volatilities on CF Bankshares and Natwest Group 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 Natwest Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Bankshares and Natwest Group.
Diversification Opportunities for CF Bankshares and Natwest Group
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CFBK and Natwest is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding CF Bankshares and Natwest Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natwest Group PLC 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 Natwest Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natwest Group PLC has no effect on the direction of CF Bankshares i.e., CF Bankshares and Natwest Group go up and down completely randomly.
Pair Corralation between CF Bankshares and Natwest Group
Given the investment horizon of 90 days CF Bankshares is expected to under-perform the Natwest Group. In addition to that, CF Bankshares is 1.28 times more volatile than Natwest Group PLC. It trades about -0.01 of its total potential returns per unit of risk. Natwest Group PLC is currently generating about 0.12 per unit of volatility. If you would invest 1,008 in Natwest Group PLC on September 16, 2024 and sell it today you would earn a total of 29.00 from holding Natwest Group PLC or generate 2.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
CF Bankshares vs. Natwest Group PLC
Performance |
Timeline |
CF Bankshares |
Natwest Group PLC |
CF Bankshares and Natwest Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CF Bankshares and Natwest Group
The main advantage of trading using opposite CF Bankshares and Natwest Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Bankshares position performs unexpectedly, Natwest Group 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 Natwest Group will offset losses from the drop in Natwest Group's long position.CF Bankshares vs. Magyar Bancorp | CF Bankshares vs. Home Federal Bancorp | CF Bankshares vs. Community West Bancshares | CF Bankshares vs. First Financial Northwest |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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