Correlation Between Admiral Group and MT Bank
Can any of the company-specific risk be diversified away by investing in both Admiral Group 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 Admiral Group and MT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Admiral Group PLC and MT Bank Corp, you can compare the effects of market volatilities on Admiral Group 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 Admiral Group with a short position of MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Admiral Group and MT Bank.
Diversification Opportunities for Admiral Group and MT Bank
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Admiral and 0JW2 is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Admiral Group PLC 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 Admiral Group 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 Admiral Group PLC 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 Admiral Group i.e., Admiral Group and MT Bank go up and down completely randomly.
Pair Corralation between Admiral Group and MT Bank
Assuming the 90 days trading horizon Admiral Group is expected to generate 6.99 times less return on investment than MT Bank. But when comparing it to its historical volatility, Admiral Group PLC is 1.35 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 0.18 of returns per unit of risk over similar time horizon. If you would invest 13,948 in MT Bank Corp on September 12, 2024 and sell it today you would earn a total of 6,415 from holding MT Bank Corp or generate 45.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 96.09% |
| Values | Daily Returns |
Admiral Group PLC vs. MT Bank Corp
Performance |
| Timeline |
| Admiral Group PLC |
| MT Bank Corp |
Admiral Group and MT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Admiral Group and MT Bank
The main advantage of trading using opposite Admiral Group and MT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Admiral Group 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.| Admiral Group vs. MT Bank Corp | Admiral Group vs. Inspiration Healthcare Group | Admiral Group vs. Primary Health Properties | Admiral Group vs. Naturhouse Health SA |
| MT Bank vs. Hong Kong Land | MT Bank vs. Neometals | MT Bank vs. Coor Service Management | MT Bank vs. Fidelity Sustainable USD |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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