Correlation Between Independent Bank and CVB Financial

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

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

Diversification Opportunities for Independent Bank and CVB Financial

0.0

Correlation Coefficient

Independent Bank  CVB Financial

Pay attention - limited upside

The 3 months correlation between Independent and CVB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Independent Bank Group and CVB Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVB Financial and Independent Bank 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 Independent Bank Group are associated (or correlated) with CVB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVB Financial has no effect on the direction of Independent Bank i.e., Independent Bank and CVB Financial go up and down completely randomly.

Pair Corralation between Independent Bank and CVB Financial

If you would invest (100.00) in Independent Bank Group on November 29, 2024 and sell it today you would earn a total of  100.00  from holding Independent Bank Group or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Independent Bank Group  vs.  CVB Financial

Independent Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Independent Bank Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Independent Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Independent Bank and CVB Financial

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

The idea behind Independent Bank Group and CVB 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.