Correlation Between Commencement Bancorp and Summit Bank

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Can any of the company-specific risk be diversified away by investing in both Commencement Bancorp and Summit Bank 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 Commencement Bancorp and Summit Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commencement Bancorp and Summit Bank Group, you can compare the effects of market volatilities on Commencement Bancorp and Summit Bank 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 Commencement Bancorp with a short position of Summit Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commencement Bancorp and Summit Bank.

Diversification Opportunities for Commencement Bancorp and Summit Bank

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Commencement and Summit is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Commencement Bancorp and Summit Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Bank Group and Commencement 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 Commencement Bancorp are associated (or correlated) with Summit Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Bank Group has no effect on the direction of Commencement Bancorp i.e., Commencement Bancorp and Summit Bank go up and down completely randomly.

Pair Corralation between Commencement Bancorp and Summit Bank

Given the investment horizon of 90 days Commencement Bancorp is expected to generate 0.97 times more return on investment than Summit Bank. However, Commencement Bancorp is 1.03 times less risky than Summit Bank. It trades about 0.02 of its potential returns per unit of risk. Summit Bank Group is currently generating about 0.0 per unit of risk. If you would invest  1,133  in Commencement Bancorp on October 25, 2024 and sell it today you would earn a total of  125.00  from holding Commencement Bancorp or generate 11.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.85%
ValuesDaily Returns

Commencement Bancorp  vs.  Summit Bank Group

 Performance 
       Timeline  
Commencement Bancorp 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Commencement Bancorp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Commencement Bancorp sustained solid returns over the last few months and may actually be approaching a breakup point.
Summit Bank Group 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Summit Bank Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward-looking signals, Summit Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Commencement Bancorp and Summit Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Commencement Bancorp and Summit Bank

The main advantage of trading using opposite Commencement Bancorp and Summit Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commencement Bancorp position performs unexpectedly, Summit Bank 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 Summit Bank will offset losses from the drop in Summit Bank's long position.
The idea behind Commencement Bancorp and Summit Bank Group 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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