Correlation Between Bogota Financial and Magyar Bancorp
Can any of the company-specific risk be diversified away by investing in both Bogota Financial and Magyar Bancorp 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 Bogota Financial and Magyar Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bogota Financial Corp and Magyar Bancorp, you can compare the effects of market volatilities on Bogota Financial and Magyar Bancorp 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 Bogota Financial with a short position of Magyar Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bogota Financial and Magyar Bancorp.
Diversification Opportunities for Bogota Financial and Magyar Bancorp
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bogota and Magyar is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bogota Financial Corp and Magyar Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Bancorp and Bogota Financial 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 Bogota Financial Corp are associated (or correlated) with Magyar Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Bancorp has no effect on the direction of Bogota Financial i.e., Bogota Financial and Magyar Bancorp go up and down completely randomly.
Pair Corralation between Bogota Financial and Magyar Bancorp
Given the investment horizon of 90 days Bogota Financial Corp is expected to under-perform the Magyar Bancorp. In addition to that, Bogota Financial is 2.2 times more volatile than Magyar Bancorp. It trades about -0.08 of its total potential returns per unit of risk. Magyar Bancorp is currently generating about 0.55 per unit of volatility. If you would invest 1,232 in Magyar Bancorp on August 30, 2024 and sell it today you would earn a total of 159.00 from holding Magyar Bancorp or generate 12.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bogota Financial Corp vs. Magyar Bancorp
Performance |
| Timeline |
| Bogota Financial Corp |
| Magyar Bancorp |
Bogota Financial and Magyar Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bogota Financial and Magyar Bancorp
The main advantage of trading using opposite Bogota Financial and Magyar Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bogota Financial position performs unexpectedly, Magyar Bancorp 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 Magyar Bancorp will offset losses from the drop in Magyar Bancorp's long position.| Bogota Financial vs. Home Federal Bancorp | Bogota Financial vs. First Financial Northwest | Bogota Financial vs. First Northwest Bancorp | Bogota Financial vs. First Capital |
| Magyar Bancorp vs. Home Federal Bancorp | Magyar Bancorp vs. Community West Bancshares | Magyar Bancorp vs. First Financial Northwest | Magyar Bancorp vs. First Northwest Bancorp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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