Correlation Between CVB Financial and First Commonwealth

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

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

Diversification Opportunities for CVB Financial and First Commonwealth

0.83

Correlation Coefficient

CVB Financial  First Commonwealth

Very poor diversification

The 3 months correlation between CVB and First is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial and First Commonwealth Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Commonwealth and CVB Financial 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 CVB Financial are associated (or correlated) with First Commonwealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Commonwealth has no effect on the direction of CVB Financial i.e., CVB Financial and First Commonwealth go up and down completely randomly.

Pair Corralation between CVB Financial and First Commonwealth

Given the investment horizon of 90 days CVB Financial is expected to generate 26.39 times less return on investment than First Commonwealth. In addition to that, CVB Financial is 1.18 times more volatile than First Commonwealth Financial. It trades about 0.0 of its total potential returns per unit of risk. First Commonwealth Financial is currently generating about 0.06 per unit of volatility. If you would invest  1,595  in First Commonwealth Financial on May 18, 2025 and sell it today you would earn a total of  72.00  from holding First Commonwealth Financial or generate 4.51% return on investment over 90 days.

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

CVB Financial  vs.  First Commonwealth Financial

CVB Financial

Risk-Adjusted Performance

Weakest

Over the last 90 days CVB Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, CVB Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

First Commonwealth

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in First Commonwealth Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, First Commonwealth is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CVB Financial and First Commonwealth

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

The idea behind CVB Financial and First Commonwealth Financial 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.