Correlation Between Consumer Portfolio and RBB Bancorp

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

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

Diversification Opportunities for Consumer Portfolio and RBB Bancorp

-0.26

Correlation Coefficient

Consumer Portfolio  RBB Bancorp

Very good diversification

The 3 months correlation between Consumer and RBB is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Portfolio Services and RBB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBB Bancorp and Consumer Portfolio 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 Consumer Portfolio Services are associated (or correlated) with RBB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBB Bancorp has no effect on the direction of Consumer Portfolio i.e., Consumer Portfolio and RBB Bancorp go up and down completely randomly.

Pair Corralation between Consumer Portfolio and RBB Bancorp

Given the investment horizon of 90 days Consumer Portfolio is expected to generate 90.41 times less return on investment than RBB Bancorp. In addition to that, Consumer Portfolio is 1.08 times more volatile than RBB Bancorp. It trades about 0.0 of its total potential returns per unit of risk. RBB Bancorp is currently generating about 0.14 per unit of volatility. If you would invest  1,685  in RBB Bancorp on May 16, 2025 and sell it today you would earn a total of  300.00  from holding RBB Bancorp or generate 17.8% return on investment over 90 days.

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

Consumer Portfolio Services  vs.  RBB Bancorp

Consumer Portfolio

Risk-Adjusted Performance

Weakest

Over the last 90 days Consumer Portfolio Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Consumer Portfolio is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

RBB Bancorp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBB Bancorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, RBB Bancorp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Consumer Portfolio and RBB Bancorp

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

The idea behind Consumer Portfolio Services and RBB 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.