Correlation Between BankFirst Capital and Malaga Financial
Can any of the company-specific risk be diversified away by investing in both BankFirst Capital and Malaga Financial 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 BankFirst Capital and Malaga Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BankFirst Capital and Malaga Financial, you can compare the effects of market volatilities on BankFirst Capital and Malaga Financial 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 BankFirst Capital with a short position of Malaga Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankFirst Capital and Malaga Financial.
Diversification Opportunities for BankFirst Capital and Malaga Financial
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BankFirst and Malaga is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding BankFirst Capital and Malaga Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malaga Financial and BankFirst Capital 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 BankFirst Capital are associated (or correlated) with Malaga Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malaga Financial has no effect on the direction of BankFirst Capital i.e., BankFirst Capital and Malaga Financial go up and down completely randomly.
Pair Corralation between BankFirst Capital and Malaga Financial
Given the investment horizon of 90 days BankFirst Capital is expected to generate 3.93 times less return on investment than Malaga Financial. But when comparing it to its historical volatility, BankFirst Capital is 2.17 times less risky than Malaga Financial. It trades about 0.01 of its potential returns per unit of risk. Malaga Financial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,033 in Malaga Financial on August 24, 2024 and sell it today you would earn a total of 243.00 from holding Malaga Financial or generate 11.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 82.06% |
| Values | Daily Returns |
BankFirst Capital vs. Malaga Financial
Performance |
| Timeline |
| BankFirst Capital |
| Malaga Financial |
BankFirst Capital and Malaga Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BankFirst Capital and Malaga Financial
The main advantage of trading using opposite BankFirst Capital and Malaga Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BankFirst Capital position performs unexpectedly, Malaga Financial 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 Malaga Financial will offset losses from the drop in Malaga Financial's long position.| BankFirst Capital vs. Nedbank Group | BankFirst Capital vs. Standard Bank Group | BankFirst Capital vs. Bank Central Asia | BankFirst Capital vs. PSB Holdings |
| Malaga Financial vs. MF Bancorp | Malaga Financial vs. United Bancorporation of | Malaga Financial vs. Harbor Bankshares | Malaga Financial vs. BankFirst Capital |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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