Correlation Between Capitol Federal and Equity Bancshares

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

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

Diversification Opportunities for Capitol Federal and Equity Bancshares

-0.42

Correlation Coefficient

Capitol Federal  Equity Bancshares

Very good diversification

The 3 months correlation between Capitol and Equity is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Federal Financial and Equity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Bancshares and Capitol Federal 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 Capitol Federal Financial are associated (or correlated) with Equity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Bancshares has no effect on the direction of Capitol Federal i.e., Capitol Federal and Equity Bancshares go up and down completely randomly.

Pair Corralation between Capitol Federal and Equity Bancshares

Given the investment horizon of 90 days Capitol Federal Financial is expected to under-perform the Equity Bancshares. In addition to that, Capitol Federal is 1.32 times more volatile than Equity Bancshares. It trades about -0.07 of its total potential returns per unit of risk. Equity Bancshares is currently generating about 0.06 per unit of volatility. If you would invest  3,245  in Equity Bancshares on February 17, 2024 and sell it today you would earn a total of  188.00  from holding Equity Bancshares or generate 5.79% return on investment over 90 days.

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

Capitol Federal Financial  vs.  Equity Bancshares

Capitol Federal Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capitol Federal Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Equity Bancshares

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Bancshares are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Equity Bancshares may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Capitol Federal and Equity Bancshares

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

The idea behind Capitol Federal Financial and Equity Bancshares 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.