Correlation Between Summit Bank and Commencement Bancorp
Can any of the company-specific risk be diversified away by investing in both Summit Bank and Commencement 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 Bank and Commencement Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Bank Group and Commencement Bancorp, you can compare the effects of market volatilities on Summit Bank and Commencement 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 Bank with a short position of Commencement Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Bank and Commencement Bancorp.
Diversification Opportunities for Summit Bank and Commencement Bancorp
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and Commencement is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Summit Bank Group and Commencement Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commencement Bancorp and Summit 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 Summit Bank Group are associated (or correlated) with Commencement Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commencement Bancorp has no effect on the direction of Summit Bank i.e., Summit Bank and Commencement Bancorp go up and down completely randomly.
Pair Corralation between Summit Bank and Commencement Bancorp
Given the investment horizon of 90 days Summit Bank Group is expected to generate 15.43 times more return on investment than Commencement Bancorp. However, Summit Bank is 15.43 times more volatile than Commencement Bancorp. It trades about 0.02 of its potential returns per unit of risk. Commencement Bancorp is currently generating about 0.1 per unit of risk. If you would invest 1,430 in Summit Bank Group on October 10, 2024 and sell it today you would lose (20.00) from holding Summit Bank Group or give up 1.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Summit Bank Group vs. Commencement Bancorp
Performance |
| Timeline |
| Summit Bank Group |
| Commencement Bancorp |
Summit Bank and Commencement Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Bank and Commencement Bancorp
The main advantage of trading using opposite Summit Bank and Commencement Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Bank position performs unexpectedly, Commencement 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 Commencement Bancorp will offset losses from the drop in Commencement Bancorp's long position.| Summit Bank vs. Savi Financial | Summit Bank vs. Pacific West Bancorp | Summit Bank vs. Commencement Bancorp | Summit Bank vs. Merchants Marine Bancorp |
| Commencement Bancorp vs. Summit Bank Group | Commencement Bancorp vs. Pacific West Bancorp | Commencement Bancorp vs. Savi Financial | Commencement Bancorp vs. MNB Holdings Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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