Correlation Between Cullman Bancorp and Capitol Federal
Can any of the company-specific risk be diversified away by investing in both Cullman Bancorp and Capitol Federal 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 Cullman Bancorp and Capitol Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cullman Bancorp and Capitol Federal Financial, you can compare the effects of market volatilities on Cullman Bancorp and Capitol Federal 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 Cullman Bancorp with a short position of Capitol Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cullman Bancorp and Capitol Federal.
Diversification Opportunities for Cullman Bancorp and Capitol Federal
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cullman and Capitol is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cullman Bancorp and Capitol Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Federal Financial and Cullman Bancorp 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 Cullman Bancorp are associated (or correlated) with Capitol Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Federal Financial has no effect on the direction of Cullman Bancorp i.e., Cullman Bancorp and Capitol Federal go up and down completely randomly.
Pair Corralation between Cullman Bancorp and Capitol Federal
Given the investment horizon of 90 days Cullman Bancorp is expected to generate 0.6 times more return on investment than Capitol Federal. However, Cullman Bancorp is 1.67 times less risky than Capitol Federal. It trades about -0.03 of its potential returns per unit of risk. Capitol Federal Financial is currently generating about -0.08 per unit of risk. If you would invest 1,060 in Cullman Bancorp on March 7, 2024 and sell it today you would lose (27.00) from holding Cullman Bancorp or give up 2.55% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 93.55% |
Values | Daily Returns |
Cullman Bancorp vs. Capitol Federal Financial
Performance |
Timeline |
Cullman Bancorp |
Capitol Federal Financial |
Cullman Bancorp and Capitol Federal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cullman Bancorp and Capitol Federal
The main advantage of trading using opposite Cullman Bancorp and Capitol Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cullman Bancorp position performs unexpectedly, Capitol Federal 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 Capitol Federal will offset losses from the drop in Capitol Federal's long position.Cullman Bancorp vs. HMN Financial | Cullman Bancorp vs. Home Federal Bancorp | Cullman Bancorp vs. Lake Shore Bancorp | Cullman Bancorp vs. Community West Bancshares |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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