Correlation Between John Marshall and Financial Institutions

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

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

Diversification Opportunities for John Marshall and Financial Institutions

0.44

Correlation Coefficient

John Marshall  Financial Institutions

Very weak diversification

The 3 months correlation between John and Financial is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding John Marshall Bancorp and Financial Institutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Institutions and John Marshall 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 John Marshall Bancorp are associated (or correlated) with Financial Institutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Institutions has no effect on the direction of John Marshall i.e., John Marshall and Financial Institutions go up and down completely randomly.

Pair Corralation between John Marshall and Financial Institutions

Given the investment horizon of 90 days John Marshall Bancorp is expected to under-perform the Financial Institutions. In addition to that, John Marshall is 1.47 times more volatile than Financial Institutions. It trades about -0.12 of its total potential returns per unit of risk. Financial Institutions is currently generating about -0.06 per unit of volatility. If you would invest  2,670  in Financial Institutions on December 29, 2024 and sell it today you would lose (170.00) from holding Financial Institutions or give up 6.37% of portfolio value over 90 days.

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

John Marshall Bancorp  vs.  Financial Institutions

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Financial Institutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Financial Institutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Financial Institutions is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with John Marshall and Financial Institutions

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

The idea behind John Marshall Bancorp and Financial Institutions 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.