Correlation Between Associated British and MT Bank
Can any of the company-specific risk be diversified away by investing in both Associated British 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 Associated British and MT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and MT Bank Corp, you can compare the effects of market volatilities on Associated British 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 Associated British with a short position of MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and MT Bank.
Diversification Opportunities for Associated British and MT Bank
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Associated and 0JW2 is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods 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 Associated British 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 Associated British Foods 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 Associated British i.e., Associated British and MT Bank go up and down completely randomly.
Pair Corralation between Associated British and MT Bank
Assuming the 90 days trading horizon Associated British is expected to generate 3.18 times less return on investment than MT Bank. But when comparing it to its historical volatility, Associated British Foods is 1.42 times less risky than MT Bank. It trades about 0.04 of its potential returns per unit of risk. MT Bank Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 11,474 in MT Bank Corp on September 19, 2024 and sell it today you would earn a total of 8,072 from holding MT Bank Corp or generate 70.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.71% |
| Values | Daily Returns |
Associated British Foods vs. MT Bank Corp
Performance |
| Timeline |
| Associated British Foods |
| MT Bank Corp |
Associated British and MT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and MT Bank
The main advantage of trading using opposite Associated British and MT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British 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.| Associated British vs. Samsung Electronics Co | Associated British vs. Samsung Electronics Co | Associated British vs. Hyundai Motor | Associated British vs. Toyota Motor Corp |
| MT Bank vs. Team Internet Group | MT Bank vs. Empire Metals Limited | MT Bank vs. GreenX Metals | MT Bank vs. McEwen Mining |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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