Correlation Between First Horizon and MT Bank
Can any of the company-specific risk be diversified away by investing in both First Horizon and MT 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 First Horizon and MT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Horizon National and MT Bank, you can compare the effects of market volatilities on First Horizon and MT 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 First Horizon with a short position of MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Horizon and MT Bank.
Diversification Opportunities for First Horizon and MT Bank
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and MTB is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding First Horizon National and MT Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank and First Horizon 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 Horizon National are associated (or correlated) with MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank has no effect on the direction of First Horizon i.e., First Horizon and MT Bank go up and down completely randomly.
Pair Corralation between First Horizon and MT Bank
Considering the 90-day investment horizon First Horizon National is expected to generate 1.27 times more return on investment than MT Bank. However, First Horizon is 1.27 times more volatile than MT Bank. It trades about 0.21 of its potential returns per unit of risk. MT Bank is currently generating about 0.18 per unit of risk. If you would invest 1,721 in First Horizon National on August 24, 2024 and sell it today you would earn a total of 296.00 from holding First Horizon National or generate 17.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Horizon National vs. MT Bank
Performance |
| Timeline |
| First Horizon National |
| MT Bank |
First Horizon and MT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Horizon and MT Bank
The main advantage of trading using opposite First Horizon and MT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Horizon position performs unexpectedly, MT 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 MT Bank will offset losses from the drop in MT Bank's long position.| First Horizon vs. Zions Bancorporation | First Horizon vs. KeyCorp | First Horizon vs. Comerica | First Horizon vs. Western Alliance Bancorporation |
| MT Bank vs. US Bancorp | MT Bank vs. Truist Financial Corp | MT Bank vs. Fifth Third Bancorp | MT Bank vs. KeyCorp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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