Correlation Between Cembra Money and MT Bank
Can any of the company-specific risk be diversified away by investing in both Cembra Money and MT 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 Cembra Money and MT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cembra Money Bank and MT Bank Corp, you can compare the effects of market volatilities on Cembra Money and MT 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 Cembra Money with a short position of MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cembra Money and MT Bank.
Diversification Opportunities for Cembra Money and MT Bank
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cembra and 0JW2 is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cembra Money Bank and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank Corp and Cembra Money 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 Cembra Money Bank are associated (or correlated) with MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of Cembra Money i.e., Cembra Money and MT Bank go up and down completely randomly.
Pair Corralation between Cembra Money and MT Bank
Assuming the 90 days trading horizon Cembra Money is expected to generate 1.87 times less return on investment than MT Bank. But when comparing it to its historical volatility, Cembra Money Bank is 1.72 times less risky than MT Bank. It trades about 0.07 of its potential returns per unit of risk. MT Bank Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 11,070 in MT Bank Corp on November 27, 2024 and sell it today you would earn a total of 8,343 from holding MT Bank Corp or generate 75.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.53% |
| Values | Daily Returns |
Cembra Money Bank vs. MT Bank Corp
Performance |
| Timeline |
| Cembra Money Bank |
| MT Bank Corp |
Cembra Money and MT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cembra Money and MT Bank
The main advantage of trading using opposite Cembra Money and MT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cembra Money position performs unexpectedly, MT 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 MT Bank will offset losses from the drop in MT Bank's long position.| Cembra Money vs. TT Electronics Plc | Cembra Money vs. Blackrock World Mining | Cembra Money vs. Coeur Mining | Cembra Money vs. Hochschild Mining plc |
| MT Bank vs. Austevoll Seafood ASA | MT Bank vs. Symphony Environmental Technologies | MT Bank vs. Monster Beverage Corp | MT Bank vs. Hilton Food Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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