Correlation Between Capitol Federal and LINKBANCORP

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

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

Diversification Opportunities for Capitol Federal and LINKBANCORP

0.56

Correlation Coefficient

Capitol Federal  LINKBANCORP

Very weak diversification

The 3 months correlation between Capitol and LINKBANCORP is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Federal Financial and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP and Capitol Federal 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 Capitol Federal Financial are associated (or correlated) with LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of Capitol Federal i.e., Capitol Federal and LINKBANCORP go up and down completely randomly.

Pair Corralation between Capitol Federal and LINKBANCORP

Given the investment horizon of 90 days Capitol Federal Financial is expected to generate 1.03 times more return on investment than LINKBANCORP. However, Capitol Federal is 1.03 times more volatile than LINKBANCORP. It trades about 0.02 of its potential returns per unit of risk. LINKBANCORP is currently generating about 0.01 per unit of risk. If you would invest  566.00  in Capitol Federal Financial on October 5, 2024 and sell it today you would earn a total of  16.00  from holding Capitol Federal Financial or generate 2.83% return on investment over 90 days.

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

Capitol Federal Financial  vs.  LINKBANCORP

Capitol Federal Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Federal Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Capitol Federal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

LINKBANCORP

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LINKBANCORP are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting forward-looking signals, LINKBANCORP sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capitol Federal and LINKBANCORP

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

The idea behind Capitol Federal Financial and LINKBANCORP 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.