Correlation Between CFSB Bancorp and Lake Shore

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

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

Diversification Opportunities for CFSB Bancorp and Lake Shore

0.71

Correlation Coefficient

CFSB Bancorp  Lake Shore

Poor diversification

The 3 months correlation between CFSB and Lake is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CFSB Bancorp and Lake Shore Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Shore Bancorp and CFSB 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 CFSB Bancorp are associated (or correlated) with Lake Shore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Shore Bancorp has no effect on the direction of CFSB Bancorp i.e., CFSB Bancorp and Lake Shore go up and down completely randomly.

Pair Corralation between CFSB Bancorp and Lake Shore

Given the investment horizon of 90 days CFSB Bancorp is expected to generate 8.87 times more return on investment than Lake Shore. However, CFSB Bancorp is 8.87 times more volatile than Lake Shore Bancorp. It trades about 0.13 of its potential returns per unit of risk. Lake Shore Bancorp is currently generating about 0.22 per unit of risk. If you would invest  794.00  in CFSB Bancorp on May 13, 2025 and sell it today you would earn a total of  595.00  from holding CFSB Bancorp or generate 74.94% return on investment over 90 days.

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

CFSB Bancorp  vs.  Lake Shore Bancorp

CFSB Bancorp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in CFSB Bancorp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, CFSB Bancorp sustained solid returns over the last few months and may actually be approaching a breakup point.

Lake Shore Bancorp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lake Shore Bancorp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental drivers, Lake Shore disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CFSB Bancorp and Lake Shore

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

The idea behind CFSB Bancorp and Lake Shore 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.