Correlation Between Cullman Bancorp and First Bancorp
Can any of the company-specific risk be diversified away by investing in both Cullman Bancorp and First 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 Cullman Bancorp and First Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cullman Bancorp and First Bancorp, you can compare the effects of market volatilities on Cullman Bancorp and First 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 Cullman Bancorp with a short position of First Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cullman Bancorp and First Bancorp.
Diversification Opportunities for Cullman Bancorp and First Bancorp
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cullman and First is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cullman Bancorp and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp and Cullman Bancorp 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 Cullman Bancorp are associated (or correlated) with First Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancorp has no effect on the direction of Cullman Bancorp i.e., Cullman Bancorp and First Bancorp go up and down completely randomly.
Pair Corralation between Cullman Bancorp and First Bancorp
Given the investment horizon of 90 days Cullman Bancorp is expected to under-perform the First Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Cullman Bancorp is 2.28 times less risky than First Bancorp. The stock trades about -0.04 of its potential returns per unit of risk. The First Bancorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,354 in First Bancorp on September 12, 2024 and sell it today you would earn a total of 501.00 from holding First Bancorp or generate 21.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.47% |
| Values | Daily Returns |
Cullman Bancorp vs. First Bancorp
Performance |
| Timeline |
| Cullman Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Bancorp |
Cullman Bancorp and First Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cullman Bancorp and First Bancorp
The main advantage of trading using opposite Cullman Bancorp and First Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cullman Bancorp position performs unexpectedly, First 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 First Bancorp will offset losses from the drop in First Bancorp's long position.| Cullman Bancorp vs. Home Federal Bancorp | Cullman Bancorp vs. Lake Shore Bancorp | Cullman Bancorp vs. Community West Bancshares | Cullman Bancorp vs. Magyar Bancorp |
| First Bancorp vs. JPMorgan Chase Co | First Bancorp vs. Citigroup | First Bancorp vs. Wells Fargo | First Bancorp vs. Toronto Dominion Bank |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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