Correlation Between John Marshall and Riverview Bancorp

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

Diversification Opportunities for John Marshall and Riverview Bancorp

0.63

Correlation Coefficient

John Marshall  Riverview Bancorp

Poor diversification

The 3 months correlation between John and Riverview is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding John Marshall Bancorp and Riverview Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riverview 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 Riverview Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riverview Bancorp has no effect on the direction of John Marshall i.e., John Marshall and Riverview Bancorp go up and down completely randomly.

Pair Corralation between John Marshall and Riverview Bancorp

Given the investment horizon of 90 days John Marshall Bancorp is expected to generate 2.08 times more return on investment than Riverview Bancorp. However, John Marshall is 2.08 times more volatile than Riverview Bancorp. It trades about 0.13 of its potential returns per unit of risk. Riverview Bancorp is currently generating about 0.25 per unit of risk. If you would invest  1,835  in John Marshall Bancorp on September 2, 2024 and sell it today you would earn a total of  430.00  from holding John Marshall Bancorp or generate 23.43% return on investment over 90 days.

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

John Marshall Bancorp  vs.  Riverview Bancorp

John Marshall Bancorp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Marshall Bancorp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, John Marshall sustained solid returns over the last few months and may actually be approaching a breakup point.

Riverview Bancorp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Riverview Bancorp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Riverview Bancorp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with John Marshall and Riverview Bancorp

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

The idea behind John Marshall Bancorp and Riverview 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 Transaction History module to view history of all your transactions and understand their impact on performance.