Correlation Between First Community and MNB Holdings
Can any of the company-specific risk be diversified away by investing in both First Community and MNB Holdings 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 First Community and MNB Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Community and MNB Holdings Corp, you can compare the effects of market volatilities on First Community and MNB Holdings 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 First Community with a short position of MNB Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and MNB Holdings.
Diversification Opportunities for First Community and MNB Holdings
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and MNB is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding First Community and MNB Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MNB Holdings Corp and First Community 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 First Community are associated (or correlated) with MNB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MNB Holdings Corp has no effect on the direction of First Community i.e., First Community and MNB Holdings go up and down completely randomly.
Pair Corralation between First Community and MNB Holdings
Given the investment horizon of 90 days First Community is expected to generate 1.01 times more return on investment than MNB Holdings. However, First Community is 1.01 times more volatile than MNB Holdings Corp. It trades about 0.08 of its potential returns per unit of risk. MNB Holdings Corp is currently generating about 0.0 per unit of risk. If you would invest 1,714 in First Community on September 14, 2024 and sell it today you would earn a total of 881.00 from holding First Community or generate 51.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
First Community vs. MNB Holdings Corp
Performance |
| Timeline |
| First Community |
| MNB Holdings Corp |
First Community and MNB Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Community and MNB Holdings
The main advantage of trading using opposite First Community and MNB Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community position performs unexpectedly, MNB Holdings 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 MNB Holdings will offset losses from the drop in MNB Holdings' long position.| First Community vs. Community West Bancshares | First Community vs. First Financial Northwest | First Community vs. First Northwest Bancorp | First Community vs. Home Federal Bancorp |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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