Correlation Between Territorial Bancorp and CIB Marine

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

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

Diversification Opportunities for Territorial Bancorp and CIB Marine

-0.8

Correlation Coefficient

Territorial Bancorp  CIB Marine

Pay attention - limited upside

The 3 months correlation between Territorial and CIB is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Territorial Bancorp and CIB Marine Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIB Marine Bancshares and Territorial 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 Territorial Bancorp are associated (or correlated) with CIB Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIB Marine Bancshares has no effect on the direction of Territorial Bancorp i.e., Territorial Bancorp and CIB Marine go up and down completely randomly.

Pair Corralation between Territorial Bancorp and CIB Marine

Given the investment horizon of 90 days Territorial Bancorp is expected to under-perform the CIB Marine. But the stock apears to be less risky and, when comparing its historical volatility, Territorial Bancorp is 1.15 times less risky than CIB Marine. The stock trades about -0.13 of its potential returns per unit of risk. The CIB Marine Bancshares is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,680  in CIB Marine Bancshares on December 29, 2024 and sell it today you would earn a total of  295.00  from holding CIB Marine Bancshares or generate 11.01% return on investment over 90 days.

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

Territorial Bancorp  vs.  CIB Marine Bancshares

Territorial Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Territorial Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

CIB Marine Bancshares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CIB Marine Bancshares are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental drivers, CIB Marine may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Territorial Bancorp and CIB Marine

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

The idea behind Territorial Bancorp and CIB Marine Bancshares 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.