Correlation Between SouthState and CNB Financial

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

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

Diversification Opportunities for SouthState and CNB Financial

0.93

Correlation Coefficient

SouthState  CNB Financial

Almost no diversification

The 3 months correlation between SouthState and CNB is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SouthState and CNB Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNB Financial and SouthState 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 SouthState are associated (or correlated) with CNB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNB Financial has no effect on the direction of SouthState i.e., SouthState and CNB Financial go up and down completely randomly.

Pair Corralation between SouthState and CNB Financial

Considering the 90-day investment horizon SouthState is expected to generate 1.33 times more return on investment than CNB Financial. However, SouthState is 1.33 times more volatile than CNB Financial. It trades about -0.03 of its potential returns per unit of risk. CNB Financial is currently generating about -0.09 per unit of risk. If you would invest  9,843  in SouthState on December 19, 2024 and sell it today you would lose (403.00) from holding SouthState or give up 4.09% of portfolio value over 90 days.

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

SouthState  vs.  CNB Financial

SouthState

Risk-Adjusted Performance

Very Weak

Over the last 90 days SouthState has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SouthState is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CNB Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days CNB Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with SouthState and CNB Financial

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

The idea behind SouthState and CNB 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.