Correlation Between Banner and Metropolitan Bank
Can any of the company-specific risk be diversified away by investing in both Banner and Metropolitan 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 Banner and Metropolitan Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banner and Metropolitan Bank Holding, you can compare the effects of market volatilities on Banner and Metropolitan 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 Banner with a short position of Metropolitan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banner and Metropolitan Bank.
Diversification Opportunities for Banner and Metropolitan Bank
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Banner and Metropolitan is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Banner and Metropolitan Bank Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank Holding and Banner 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 Banner are associated (or correlated) with Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank Holding has no effect on the direction of Banner i.e., Banner and Metropolitan Bank go up and down completely randomly.
Pair Corralation between Banner and Metropolitan Bank
Given the investment horizon of 90 days Banner is expected to generate 1.07 times less return on investment than Metropolitan Bank. But when comparing it to its historical volatility, Banner is 1.26 times less risky than Metropolitan Bank. It trades about 0.17 of its potential returns per unit of risk. Metropolitan Bank Holding is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,044 in Metropolitan Bank Holding on September 3, 2024 and sell it today you would earn a total of 1,450 from holding Metropolitan Bank Holding or generate 28.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banner vs. Metropolitan Bank Holding
Performance |
| Timeline |
| Banner |
| Metropolitan Bank Holding |
Banner and Metropolitan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banner and Metropolitan Bank
The main advantage of trading using opposite Banner and Metropolitan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banner position performs unexpectedly, Metropolitan 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 Metropolitan Bank will offset losses from the drop in Metropolitan Bank's long position.| Banner vs. BancFirst | Banner vs. City Holding | Banner vs. Columbia Banking System | Banner vs. CVB Financial |
| Metropolitan Bank vs. Customers Bancorp | Metropolitan Bank vs. BayCom Corp | Metropolitan Bank vs. Capital Bancorp | Metropolitan Bank vs. Investar Holding 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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