Correlation Between John Marshall and Hope Bancorp

Can any of the company-specific risk be diversified away by investing in both John Marshall and Hope Bancorp 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 Hope Bancorp 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 Hope Bancorp, you can compare the effects of market volatilities on John Marshall and Hope Bancorp 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 Hope Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Marshall and Hope Bancorp.

Diversification Opportunities for John Marshall and Hope Bancorp

0.9

Correlation Coefficient

John Marshall  Hope Bancorp

Almost no diversification

The 3 months correlation between John and Hope is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding John Marshall Bancorp and Hope Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hope Bancorp 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 Hope Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hope Bancorp has no effect on the direction of John Marshall i.e., John Marshall and Hope Bancorp go up and down completely randomly.

Pair Corralation between John Marshall and Hope Bancorp

Given the investment horizon of 90 days John Marshall Bancorp is expected to under-perform the Hope Bancorp. In addition to that, John Marshall is 1.47 times more volatile than Hope Bancorp. It trades about -0.1 of its total potential returns per unit of risk. Hope Bancorp is currently generating about -0.13 per unit of volatility. If you would invest  1,215  in Hope Bancorp on December 27, 2024 and sell it today you would lose (149.00) from holding Hope Bancorp or give up 12.26% of portfolio value over 90 days.

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

John Marshall Bancorp  vs.  Hope Bancorp

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.

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with John Marshall and Hope Bancorp

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

The idea behind John Marshall Bancorp and Hope 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.