Correlation Between Fastly and CMUV Bancorp

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

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

Diversification Opportunities for Fastly and CMUV Bancorp

0.86

Correlation Coefficient

Fastly  CMUV Bancorp

Very poor diversification

The 3 months correlation between Fastly and CMUV is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fastly Inc and CMUV Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMUV Bancorp and Fastly 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 Fastly Inc are associated (or correlated) with CMUV Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMUV Bancorp has no effect on the direction of Fastly i.e., Fastly and CMUV Bancorp go up and down completely randomly.

Pair Corralation between Fastly and CMUV Bancorp

Given the investment horizon of 90 days Fastly Inc is expected to under-perform the CMUV Bancorp. In addition to that, Fastly is 3.99 times more volatile than CMUV Bancorp. It trades about -0.02 of its total potential returns per unit of risk. CMUV Bancorp is currently generating about 0.1 per unit of volatility. If you would invest  1,717  in CMUV Bancorp on October 12, 2024 and sell it today you would earn a total of  343.00  from holding CMUV Bancorp or generate 19.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	91.44%
Values	Daily Returns

Fastly Inc  vs.  CMUV Bancorp

Fastly Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fastly Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Fastly showed solid returns over the last few months and may actually be approaching a breakup point.

CMUV Bancorp

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CMUV Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, CMUV Bancorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fastly and CMUV Bancorp

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

The idea behind Fastly Inc and CMUV Bancorp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.