Correlation Between Equity Bancshares, and Merchants Bancorp
Can any of the company-specific risk be diversified away by investing in both Equity Bancshares, and Merchants 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 Equity Bancshares, and Merchants Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Bancshares, and Merchants Bancorp, you can compare the effects of market volatilities on Equity Bancshares, and Merchants 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 Equity Bancshares, with a short position of Merchants Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Bancshares, and Merchants Bancorp.
Diversification Opportunities for Equity Bancshares, and Merchants Bancorp
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Equity and Merchants is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Equity Bancshares, and Merchants Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants Bancorp and Equity Bancshares, 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 Equity Bancshares, are associated (or correlated) with Merchants Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants Bancorp has no effect on the direction of Equity Bancshares, i.e., Equity Bancshares, and Merchants Bancorp go up and down completely randomly.
Pair Corralation between Equity Bancshares, and Merchants Bancorp
Given the investment horizon of 90 days Equity Bancshares, is expected to generate 7.5 times more return on investment than Merchants Bancorp. However, Equity Bancshares, is 7.5 times more volatile than Merchants Bancorp. It trades about 0.17 of its potential returns per unit of risk. Merchants Bancorp is currently generating about 0.17 per unit of risk. If you would invest 3,313 in Equity Bancshares, on August 28, 2024 and sell it today you would earn a total of 1,608 from holding Equity Bancshares, or generate 48.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Bancshares, vs. Merchants Bancorp
Performance |
| Timeline |
| Equity Bancshares, |
| Merchants Bancorp |
Equity Bancshares, and Merchants Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Bancshares, and Merchants Bancorp
The main advantage of trading using opposite Equity Bancshares, and Merchants Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Bancshares, position performs unexpectedly, Merchants 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 Merchants Bancorp will offset losses from the drop in Merchants Bancorp's long position.| Equity Bancshares, vs. Brookline Bancorp | Equity Bancshares, vs. Kearny Financial Corp | Equity Bancshares, vs. Heritage Financial | Equity Bancshares, vs. FVCBankcorp |
| Merchants Bancorp vs. Medallion Bank PR | Merchants Bancorp vs. Northern Trust | Merchants Bancorp vs. Valley National Bancorp | Merchants Bancorp vs. Valley National 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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