Correlation Between Community Financial and Cullman Bancorp
Can any of the company-specific risk be diversified away by investing in both Community Financial 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 Community Financial and Cullman Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Community Financial Corp and Cullman Bancorp, you can compare the effects of market volatilities on Community Financial 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 Community Financial with a short position of Cullman Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Financial and Cullman Bancorp.
Diversification Opportunities for Community Financial and Cullman Bancorp
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Community and Cullman is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Community Financial Corp and Cullman Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullman Bancorp and Community Financial 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 Community Financial Corp 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 Community Financial i.e., Community Financial and Cullman Bancorp go up and down completely randomly.
Pair Corralation between Community Financial and Cullman Bancorp
If you would invest 971.00 in Cullman Bancorp on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Cullman Bancorp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community Financial Corp vs. Cullman Bancorp
Performance |
| Timeline |
| Community Financial Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Cullman Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Community Financial and Cullman Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community Financial and Cullman Bancorp
The main advantage of trading using opposite Community Financial and Cullman Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Financial 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.| Community Financial vs. Southern Missouri Bancorp | Community Financial vs. Western New England | Community Financial vs. First Community | Community Financial vs. SB Financial Group |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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