Correlation Between Main Street and Cullman Bancorp
Can any of the company-specific risk be diversified away by investing in both Main Street 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 Main Street and Cullman Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Financial and Cullman Bancorp, you can compare the effects of market volatilities on Main Street 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 Main Street with a short position of Cullman Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and Cullman Bancorp.
Diversification Opportunities for Main Street and Cullman Bancorp
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Main and Cullman is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Financial and Cullman Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullman Bancorp and Main Street 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 Main Street Financial 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 Main Street i.e., Main Street and Cullman Bancorp go up and down completely randomly.
Pair Corralation between Main Street and Cullman Bancorp
Given the investment horizon of 90 days Main Street Financial is expected to generate 2.17 times more return on investment than Cullman Bancorp. However, Main Street is 2.17 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 -0.04 per unit of risk. If you would invest 1,651 in Main Street Financial on November 5, 2024 and sell it today you would lose (231.00) from holding Main Street Financial or give up 13.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 70.79% |
| Values | Daily Returns |
Main Street Financial vs. Cullman Bancorp
Performance |
| Timeline |
| Main Street Financial |
| Cullman Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Main Street and Cullman Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and Cullman Bancorp
The main advantage of trading using opposite Main Street and Cullman Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street 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.| Main Street vs. CCFNB Bancorp | Main Street vs. Burke Herbert Financial | Main Street vs. First IC | Main Street vs. Enterprise Financial Services |
| 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 Valuation module to check real value of public entities based on technical and fundamental data.
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