Correlation Between Civista Bancshares and Victory Bancorp

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

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

Diversification Opportunities for Civista Bancshares and Victory Bancorp

0.52

Correlation Coefficient

Civista Bancshares  Victory Bancorp

Very weak diversification

The 3 months correlation between Civista and Victory is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Civista Bancshares and The Victory Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Bancorp and Civista Bancshares 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 Civista Bancshares are associated (or correlated) with Victory Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Bancorp has no effect on the direction of Civista Bancshares i.e., Civista Bancshares and Victory Bancorp go up and down completely randomly.

Pair Corralation between Civista Bancshares and Victory Bancorp

Given the investment horizon of 90 days Civista Bancshares is expected to generate 1.46 times more return on investment than Victory Bancorp. However, Civista Bancshares is 1.46 times more volatile than The Victory Bancorp. It trades about 0.03 of its potential returns per unit of risk. The Victory Bancorp is currently generating about -0.13 per unit of risk. If you would invest  1,512  in Civista Bancshares on January 24, 2024 and sell it today you would earn a total of  12.00  from holding Civista Bancshares or generate 0.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Civista Bancshares  vs.  The Victory Bancorp

Civista Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Civista Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Victory Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Civista Bancshares and Victory Bancorp

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

The idea behind Civista Bancshares and The Victory 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.