Correlation Between CHIBA BANK and Cullen/Frost Bankers

Can any of the company-specific risk be diversified away by investing in both CHIBA BANK and Cullen/Frost Bankers 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 CHIBA BANK and Cullen/Frost Bankers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CHIBA BANK and CullenFrost Bankers, you can compare the effects of market volatilities on CHIBA BANK and Cullen/Frost Bankers 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 CHIBA BANK with a short position of Cullen/Frost Bankers. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHIBA BANK and Cullen/Frost Bankers.

Diversification Opportunities for CHIBA BANK and Cullen/Frost Bankers

0.6

Correlation Coefficient

CHIBA BANK  Cullen/Frost Bankers

Poor diversification

The 3 months correlation between CHIBA and Cullen/Frost is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CHIBA BANK and CullenFrost Bankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen/Frost Bankers and CHIBA BANK 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 CHIBA BANK are associated (or correlated) with Cullen/Frost Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen/Frost Bankers has no effect on the direction of CHIBA BANK i.e., CHIBA BANK and Cullen/Frost Bankers go up and down completely randomly.

Pair Corralation between CHIBA BANK and Cullen/Frost Bankers

Assuming the 90 days trading horizon CHIBA BANK is expected to generate 2.57 times less return on investment than Cullen/Frost Bankers. But when comparing it to its historical volatility, CHIBA BANK is 1.21 times less risky than Cullen/Frost Bankers. It trades about 0.09 of its potential returns per unit of risk. CullenFrost Bankers is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  9,528  in CullenFrost Bankers on April 22, 2025 and sell it today you would earn a total of  2,272  from holding CullenFrost Bankers or generate 23.85% return on investment over 90 days.

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

CHIBA BANK  vs.  CullenFrost Bankers

CHIBA BANK

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CHIBA BANK are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, CHIBA BANK may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Cullen/Frost Bankers

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CullenFrost Bankers are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Cullen/Frost Bankers reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHIBA BANK and Cullen/Frost Bankers

The main advantage of trading using opposite CHIBA BANK and Cullen/Frost Bankers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHIBA BANK position performs unexpectedly, Cullen/Frost Bankers 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 Cullen/Frost Bankers will offset losses from the drop in Cullen/Frost Bankers' long position.

The idea behind CHIBA BANK and CullenFrost Bankers 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.