Correlation Between CVB Financial and Capitol Federal

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

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

Diversification Opportunities for CVB Financial and Capitol Federal

0.83

Correlation Coefficient

CVB Financial  Capitol Federal

Very poor diversification

The 3 months correlation between CVB and Capitol is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial and Capitol Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Federal Financial and CVB 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 CVB Financial are associated (or correlated) with Capitol Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Federal Financial has no effect on the direction of CVB Financial i.e., CVB Financial and Capitol Federal go up and down completely randomly.

Pair Corralation between CVB Financial and Capitol Federal

Given the investment horizon of 90 days CVB Financial is expected to under-perform the Capitol Federal. In addition to that, CVB Financial is 1.2 times more volatile than Capitol Federal Financial. It trades about -0.13 of its total potential returns per unit of risk. Capitol Federal Financial is currently generating about -0.12 per unit of volatility. If you would invest  659.00  in Capitol Federal Financial on November 29, 2024 and sell it today you would lose (69.00) from holding Capitol Federal Financial or give up 10.47% of portfolio value over 90 days.

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

CVB Financial  vs.  Capitol Federal Financial

CVB Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVB Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Capitol Federal Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capitol Federal Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with CVB Financial and Capitol Federal

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

The idea behind CVB Financial and Capitol Federal Financial 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.