Correlation Between Cincinnati Bancorp and Burke Herbert

Can any of the company-specific risk be diversified away by investing in both Cincinnati Bancorp and Burke Herbert 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 Cincinnati Bancorp and Burke Herbert into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cincinnati Bancorp and Burke Herbert Financial, you can compare the effects of market volatilities on Cincinnati Bancorp and Burke Herbert 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 Cincinnati Bancorp with a short position of Burke Herbert. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Bancorp and Burke Herbert.

Diversification Opportunities for Cincinnati Bancorp and Burke Herbert

0.24

Correlation Coefficient

Cincinnati Bancorp  Burke Herbert

Modest diversification

The 3 months correlation between Cincinnati and Burke is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Bancorp and Burke Herbert Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burke Herbert Financial and Cincinnati 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 Cincinnati Bancorp are associated (or correlated) with Burke Herbert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burke Herbert Financial has no effect on the direction of Cincinnati Bancorp i.e., Cincinnati Bancorp and Burke Herbert go up and down completely randomly.

Pair Corralation between Cincinnati Bancorp and Burke Herbert

If you would invest  7,590  in Burke Herbert Financial on September 1, 2024 and sell it today you would lose (662.00) from holding Burke Herbert Financial or give up 8.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.27%
Values	Daily Returns

Cincinnati Bancorp  vs.  Burke Herbert Financial

Cincinnati Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cincinnati Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cincinnati Bancorp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Burke Herbert Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Burke Herbert Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Burke Herbert may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Cincinnati Bancorp and Burke Herbert

The main advantage of trading using opposite Cincinnati Bancorp and Burke Herbert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Bancorp position performs unexpectedly, Burke Herbert 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 Burke Herbert will offset losses from the drop in Burke Herbert's long position.

The idea behind Cincinnati Bancorp and Burke Herbert Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.