Correlation Between Eastern Michigan and PT Bank
Can any of the company-specific risk be diversified away by investing in both Eastern Michigan and PT 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 Eastern Michigan and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Michigan Financial and PT Bank Rakyat, you can compare the effects of market volatilities on Eastern Michigan and PT 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 Eastern Michigan with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Michigan and PT Bank.
Diversification Opportunities for Eastern Michigan and PT Bank
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eastern and BKRKF is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Michigan Financial and PT Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Rakyat and Eastern Michigan 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 Eastern Michigan Financial are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Rakyat has no effect on the direction of Eastern Michigan i.e., Eastern Michigan and PT Bank go up and down completely randomly.
Pair Corralation between Eastern Michigan and PT Bank
Given the investment horizon of 90 days Eastern Michigan is expected to generate 1.74 times less return on investment than PT Bank. But when comparing it to its historical volatility, Eastern Michigan Financial is 6.33 times less risky than PT Bank. It trades about 0.16 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 28.00 in PT Bank Rakyat on September 13, 2024 and sell it today you would earn a total of 1.00 from holding PT Bank Rakyat or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Michigan Financial vs. PT Bank Rakyat
Performance |
| Timeline |
| Eastern Michigan Fin |
| PT Bank Rakyat |
Eastern Michigan and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Michigan and PT Bank
The main advantage of trading using opposite Eastern Michigan and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Michigan position performs unexpectedly, PT 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 PT Bank will offset losses from the drop in PT Bank's long position.| Eastern Michigan vs. Commercial National Financial | Eastern Michigan vs. Mifflinburg Bancorp | Eastern Michigan vs. Apollo Bancorp | Eastern Michigan vs. Community Bankers |
| PT Bank vs. Morningstar Unconstrained Allocation | PT Bank vs. Bondbloxx ETF Trust | PT Bank vs. Spring Valley Acquisition | PT Bank vs. Bondbloxx ETF Trust |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |