Correlation Between Commercial National and Bank First

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

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

Diversification Opportunities for Commercial National and Bank First

0.54

Correlation Coefficient

Commercial National  Bank First

Very weak diversification

The 3 months correlation between Commercial and Bank is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Commercial National Financial and Bank First National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank First National and Commercial National 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 Commercial National Financial are associated (or correlated) with Bank First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank First National has no effect on the direction of Commercial National i.e., Commercial National and Bank First go up and down completely randomly.

Pair Corralation between Commercial National and Bank First

Given the investment horizon of 90 days Commercial National Financial is expected to under-perform the Bank First. But the pink sheet apears to be less risky and, when comparing its historical volatility, Commercial National Financial is 1.02 times less risky than Bank First. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Bank First National is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  8,534  in Bank First National on February 19, 2024 and sell it today you would lose (60.00) from holding Bank First National or give up 0.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Commercial National Financial  vs.  Bank First National

Commercial National

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bank First National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank First National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Bank First is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Commercial National and Bank First

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

The idea behind Commercial National Financial and Bank First National 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.