Correlation Between Customers Bancorp and Peoples Fin

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

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

Diversification Opportunities for Customers Bancorp and Peoples Fin

0.63

Correlation Coefficient

Customers Bancorp  Peoples Fin

Poor diversification

The 3 months correlation between Customers and Peoples is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Customers Bancorp and Peoples Fin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Fin and Customers Bancorp 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 Customers Bancorp are associated (or correlated) with Peoples Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Fin has no effect on the direction of Customers Bancorp i.e., Customers Bancorp and Peoples Fin go up and down completely randomly.

Pair Corralation between Customers Bancorp and Peoples Fin

Given the investment horizon of 90 days Customers Bancorp is expected to generate 0.99 times more return on investment than Peoples Fin. However, Customers Bancorp is 1.01 times less risky than Peoples Fin. It trades about -0.04 of its potential returns per unit of risk. Peoples Fin is currently generating about -0.05 per unit of risk. If you would invest  5,265  in Customers Bancorp on February 14, 2024 and sell it today you would lose (366.00) from holding Customers Bancorp or give up 6.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Customers Bancorp  vs.  Peoples Fin

Customers Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Customers Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Customers Bancorp is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Peoples Fin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Peoples Fin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Customers Bancorp and Peoples Fin

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

The idea behind Customers Bancorp and Peoples Fin 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.