Correlation Between Hope Bancorp and John Marshall

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

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

Diversification Opportunities for Hope Bancorp and John Marshall

0.94

Correlation Coefficient

Hope Bancorp  John Marshall

Almost no diversification

The 3 months correlation between Hope and John is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Hope Bancorp 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 Hope 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 Hope Bancorp 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 Hope Bancorp i.e., Hope Bancorp and John Marshall go up and down completely randomly.

Pair Corralation between Hope Bancorp and John Marshall

Given the investment horizon of 90 days Hope Bancorp is expected to under-perform the John Marshall. But the stock apears to be less risky and, when comparing its historical volatility, Hope Bancorp is 1.42 times less risky than John Marshall. The stock trades about -0.21 of its potential returns per unit of risk. The John Marshall Bancorp is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  2,265  in John Marshall Bancorp on November 29, 2024 and sell it today you would lose (405.00) from holding John Marshall Bancorp or give up 17.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Hope Bancorp  vs.  John Marshall Bancorp

Hope Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hope Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

John Marshall Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days John Marshall Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hope Bancorp and John Marshall

The main advantage of trading using opposite Hope Bancorp and John Marshall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hope Bancorp 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.

The idea behind Hope Bancorp and John Marshall Bancorp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..