Correlation Between John Marshall and Cullman Bancorp

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

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

Diversification Opportunities for John Marshall and Cullman Bancorp

-0.4

Correlation Coefficient

John Marshall  Cullman Bancorp

Very good diversification

The 3 months correlation between John and Cullman is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding John Marshall Bancorp and Cullman Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullman Bancorp and John Marshall 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 John Marshall Bancorp are associated (or correlated) with Cullman Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullman Bancorp has no effect on the direction of John Marshall i.e., John Marshall and Cullman Bancorp go up and down completely randomly.

Pair Corralation between John Marshall and Cullman Bancorp

Given the investment horizon of 90 days John Marshall Bancorp is expected to generate 2.7 times more return on investment than Cullman Bancorp. However, John Marshall is 2.7 times more volatile than Cullman Bancorp. It trades about 0.0 of its potential returns per unit of risk. Cullman Bancorp is currently generating about -0.01 per unit of risk. If you would invest  2,454  in John Marshall Bancorp on June 27, 2024 and sell it today you would lose (564.00) from holding John Marshall Bancorp or give up 22.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.48%
Values	Daily Returns

John Marshall Bancorp  vs.  Cullman Bancorp

John Marshall Bancorp

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in John Marshall Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, John Marshall may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Cullman Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cullman Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in October 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with John Marshall and Cullman Bancorp

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

The idea behind John Marshall Bancorp and Cullman 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.