Correlation Between Raymond James and Metro Bank
Can any of the company-specific risk be diversified away by investing in both Raymond James and Metro Bank 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 Raymond James and Metro Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raymond James Financial and Metro Bank PLC, you can compare the effects of market volatilities on Raymond James and Metro Bank 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 Raymond James with a short position of Metro Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raymond James and Metro Bank.
Diversification Opportunities for Raymond James and Metro Bank
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Raymond and Metro is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Raymond James Financial and Metro Bank PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Bank PLC and Raymond James 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 Raymond James Financial are associated (or correlated) with Metro Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Bank PLC has no effect on the direction of Raymond James i.e., Raymond James and Metro Bank go up and down completely randomly.
Pair Corralation between Raymond James and Metro Bank
Assuming the 90 days trading horizon Raymond James is expected to generate 2.38 times less return on investment than Metro Bank. But when comparing it to its historical volatility, Raymond James Financial is 1.89 times less risky than Metro Bank. It trades about 0.12 of its potential returns per unit of risk. Metro Bank PLC is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,410 in Metro Bank PLC on November 3, 2024 and sell it today you would earn a total of 6,810 from holding Metro Bank PLC or generate 199.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 93.2% |
| Values | Daily Returns |
Raymond James Financial vs. Metro Bank PLC
Performance |
| Timeline |
| Raymond James Financial |
| Metro Bank PLC |
Raymond James and Metro Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raymond James and Metro Bank
The main advantage of trading using opposite Raymond James and Metro Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raymond James position performs unexpectedly, Metro Bank 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 Metro Bank will offset losses from the drop in Metro Bank's long position.| Raymond James vs. Samsung Electronics Co | Raymond James vs. Samsung Electronics Co | Raymond James vs. Toyota Motor Corp | Raymond James vs. SoftBank Group Corp |
| Metro Bank vs. Air Products Chemicals | Metro Bank vs. Naked Wines plc | Metro Bank vs. Pentair PLC | Metro Bank vs. Sealed Air Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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