Correlation Between Tectonic Financial and John Marshall
Can any of the company-specific risk be diversified away by investing in both Tectonic Financial and John Marshall 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 Tectonic Financial and John Marshall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tectonic Financial PR and John Marshall Bancorp, you can compare the effects of market volatilities on Tectonic Financial and John Marshall 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 Tectonic Financial with a short position of John Marshall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tectonic Financial and John Marshall.
Diversification Opportunities for Tectonic Financial and John Marshall
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tectonic and John is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Financial PR and John Marshall Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Marshall Bancorp and Tectonic 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 Tectonic Financial PR are associated (or correlated) with John Marshall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Marshall Bancorp has no effect on the direction of Tectonic Financial i.e., Tectonic Financial and John Marshall go up and down completely randomly.
Pair Corralation between Tectonic Financial and John Marshall
Assuming the 90 days horizon Tectonic Financial is expected to generate 3.32 times less return on investment than John Marshall. But when comparing it to its historical volatility, Tectonic Financial PR is 4.0 times less risky than John Marshall. It trades about 0.08 of its potential returns per unit of risk. John Marshall Bancorp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,727 in John Marshall Bancorp on September 1, 2024 and sell it today you would earn a total of 582.00 from holding John Marshall Bancorp or generate 33.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tectonic Financial PR vs. John Marshall Bancorp
Performance |
| Timeline |
| Tectonic Financial |
| John Marshall Bancorp |
Tectonic Financial and John Marshall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tectonic Financial and John Marshall
The main advantage of trading using opposite Tectonic Financial and John Marshall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tectonic Financial position performs unexpectedly, John Marshall 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 John Marshall will offset losses from the drop in John Marshall's long position.| Tectonic Financial vs. First Guaranty Bancshares | Tectonic Financial vs. First Merchants | Tectonic Financial vs. Associated Banc Corp | Tectonic Financial vs. Bridgewater Bancshares Depositary |
| John Marshall vs. Home Federal Bancorp | John Marshall vs. Magyar Bancorp | John Marshall vs. ChoiceOne Financial Services | John Marshall vs. Affinity Bancshares |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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