Correlation Between Summit Bancshares and Catalyst Bancorp

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

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

Diversification Opportunities for Summit Bancshares and Catalyst Bancorp

0.59

Correlation Coefficient

Summit Bancshares  Catalyst Bancorp

Very weak diversification

The 3 months correlation between Summit and Catalyst is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Summit Bancshares and Catalyst Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Bancorp and Summit Bancshares 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 Summit Bancshares are associated (or correlated) with Catalyst Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Bancorp has no effect on the direction of Summit Bancshares i.e., Summit Bancshares and Catalyst Bancorp go up and down completely randomly.

Pair Corralation between Summit Bancshares and Catalyst Bancorp

Given the investment horizon of 90 days Summit Bancshares is expected to generate 2.18 times less return on investment than Catalyst Bancorp. But when comparing it to its historical volatility, Summit Bancshares is 1.77 times less risky than Catalyst Bancorp. It trades about 0.23 of its potential returns per unit of risk. Catalyst Bancorp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,266  in Catalyst Bancorp on June 29, 2025 and sell it today you would earn a total of  54.00  from holding Catalyst Bancorp or generate 4.27% return on investment over 90 days.

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

Summit Bancshares  vs.  Catalyst Bancorp

Summit Bancshares

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Bancshares are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Summit Bancshares may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Catalyst Bancorp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Bancorp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Catalyst Bancorp may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Pair Trading with Summit Bancshares and Catalyst Bancorp

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

The idea behind Summit Bancshares and Catalyst 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.