Correlation Between Century Next and Triad Business

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

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

Diversification Opportunities for Century Next and Triad Business

-0.71

Correlation Coefficient

Century Next  Triad Business

Pay attention - limited upside

The 3 months correlation between Century and Triad is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Century Next Financial and Triad Business Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triad Business Bank and Century Next 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 Century Next Financial are associated (or correlated) with Triad Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triad Business Bank has no effect on the direction of Century Next i.e., Century Next and Triad Business go up and down completely randomly.

Pair Corralation between Century Next and Triad Business

Given the investment horizon of 90 days Century Next Financial is expected to generate 0.47 times more return on investment than Triad Business. However, Century Next Financial is 2.11 times less risky than Triad Business. It trades about 0.12 of its potential returns per unit of risk. Triad Business Bank is currently generating about -0.03 per unit of risk. If you would invest  2,962  in Century Next Financial on September 4, 2024 and sell it today you would earn a total of  913.00  from holding Century Next Financial or generate 30.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	78.63%
Values	Daily Returns

Century Next Financial  vs.  Triad Business Bank

Century Next Financial

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Century Next Financial are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Century Next showed solid returns over the last few months and may actually be approaching a breakup point.

Triad Business Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triad Business Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Triad Business is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Century Next and Triad Business

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

The idea behind Century Next Financial and Triad Business Bank 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.