Correlation Between Mainstreet Bank and Cullman Bancorp
Can any of the company-specific risk be diversified away by investing in both Mainstreet Bank 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 Mainstreet Bank and Cullman Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstreet Bank and Cullman Bancorp, you can compare the effects of market volatilities on Mainstreet Bank 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 Mainstreet Bank with a short position of Cullman Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstreet Bank and Cullman Bancorp.
Diversification Opportunities for Mainstreet Bank and Cullman Bancorp
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mainstreet and Cullman is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Mainstreet Bank and Cullman Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullman Bancorp and Mainstreet 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 Mainstreet Bank 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 Mainstreet Bank i.e., Mainstreet Bank and Cullman Bancorp go up and down completely randomly.
Pair Corralation between Mainstreet Bank and Cullman Bancorp
Given the investment horizon of 90 days Mainstreet Bank is expected to under-perform the Cullman Bancorp. In addition to that, Mainstreet Bank is 1.94 times more volatile than Cullman Bancorp. It trades about -0.02 of its total potential returns per unit of risk. Cullman Bancorp is currently generating about -0.02 per unit of volatility. If you would invest 1,102 in Cullman Bancorp on August 30, 2024 and sell it today you would lose (131.00) from holding Cullman Bancorp or give up 11.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 79.39% |
| Values | Daily Returns |
Mainstreet Bank vs. Cullman Bancorp
Performance |
| Timeline |
| Mainstreet Bank |
| Cullman Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Mainstreet Bank and Cullman Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstreet Bank and Cullman Bancorp
The main advantage of trading using opposite Mainstreet Bank and Cullman Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstreet Bank 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.| Mainstreet Bank vs. Oak Valley Bancorp | Mainstreet Bank vs. Home Federal Bancorp | Mainstreet Bank vs. LINKBANCORP | Mainstreet Bank vs. First Northwest Bancorp |
| Cullman Bancorp vs. Home Federal Bancorp | Cullman Bancorp vs. Lake Shore Bancorp | Cullman Bancorp vs. Community West Bancshares | Cullman Bancorp vs. Magyar Bancorp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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