Correlation Between MT Bank and Aberforth Smaller
Can any of the company-specific risk be diversified away by investing in both MT Bank and Aberforth Smaller 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 MT Bank and Aberforth Smaller into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MT Bank Corp and Aberforth Smaller Companies, you can compare the effects of market volatilities on MT Bank and Aberforth Smaller 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 MT Bank with a short position of Aberforth Smaller. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and Aberforth Smaller.
Diversification Opportunities for MT Bank and Aberforth Smaller
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between 0JW2 and Aberforth is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank Corp and Aberforth Smaller Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberforth Smaller and MT Bank 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 MT Bank Corp are associated (or correlated) with Aberforth Smaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberforth Smaller has no effect on the direction of MT Bank i.e., MT Bank and Aberforth Smaller go up and down completely randomly.
Pair Corralation between MT Bank and Aberforth Smaller
Assuming the 90 days trading horizon MT Bank Corp is expected to generate 1.81 times more return on investment than Aberforth Smaller. However, MT Bank is 1.81 times more volatile than Aberforth Smaller Companies. It trades about 0.06 of its potential returns per unit of risk. Aberforth Smaller Companies is currently generating about 0.02 per unit of risk. If you would invest 13,357 in MT Bank Corp on December 11, 2024 and sell it today you would earn a total of 4,111 from holding MT Bank Corp or generate 30.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.5% |
| Values | Daily Returns |
MT Bank Corp vs. Aberforth Smaller Companies
Performance |
| Timeline |
| MT Bank Corp |
| Aberforth Smaller |
MT Bank and Aberforth Smaller Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MT Bank and Aberforth Smaller
The main advantage of trading using opposite MT Bank and Aberforth Smaller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank position performs unexpectedly, Aberforth Smaller 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 Aberforth Smaller will offset losses from the drop in Aberforth Smaller's long position.| MT Bank vs. Auction Technology Group | ||
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Check out your portfolio center.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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