Correlation Between Orange County and Cullman Bancorp
Can any of the company-specific risk be diversified away by investing in both Orange County 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 Orange County and Cullman Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orange County Bancorp and Cullman Bancorp, you can compare the effects of market volatilities on Orange County 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 Orange County with a short position of Cullman Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange County and Cullman Bancorp.
Diversification Opportunities for Orange County and Cullman Bancorp
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Orange and Cullman is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Orange County Bancorp and Cullman Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullman Bancorp and Orange County 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 Orange County 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 Orange County i.e., Orange County and Cullman Bancorp go up and down completely randomly.
Pair Corralation between Orange County and Cullman Bancorp
Considering the 90-day investment horizon Orange County Bancorp is expected to generate 5.02 times more return on investment than Cullman Bancorp. However, Orange County is 5.02 times more volatile than Cullman Bancorp. It trades about 0.06 of its potential returns per unit of risk. Cullman Bancorp is currently generating about -0.19 per unit of risk. If you would invest 4,867 in Orange County Bancorp on August 25, 2024 and sell it today you would earn a total of 1,083 from holding Orange County Bancorp or generate 22.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 29.92% |
| Values | Daily Returns |
Orange County Bancorp vs. Cullman Bancorp
Performance |
| Timeline |
| Orange County Bancorp |
| Cullman Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Orange County and Cullman Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orange County and Cullman Bancorp
The main advantage of trading using opposite Orange County and Cullman Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orange County 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.| Orange County vs. Southern States Bancshares | Orange County vs. US Century Bank | Orange County vs. Third Coast Bancshares | Orange County vs. Esquire Financial Holdings |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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