Correlation Between Matson Money and Regional Bank
Can any of the company-specific risk be diversified away by investing in both Matson Money and Regional 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 Matson Money and Regional Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matson Money Equity and Regional Bank Fund, you can compare the effects of market volatilities on Matson Money and Regional 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 Matson Money with a short position of Regional Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matson Money and Regional Bank.
Diversification Opportunities for Matson Money and Regional Bank
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Matson and Regional is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Matson Money Equity and Regional Bank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Bank and Matson Money 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 Matson Money Equity are associated (or correlated) with Regional Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Bank has no effect on the direction of Matson Money i.e., Matson Money and Regional Bank go up and down completely randomly.
Pair Corralation between Matson Money and Regional Bank
Assuming the 90 days horizon Matson Money is expected to generate 2.63 times less return on investment than Regional Bank. But when comparing it to its historical volatility, Matson Money Equity is 1.75 times less risky than Regional Bank. It trades about 0.11 of its potential returns per unit of risk. Regional Bank Fund is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,176 in Regional Bank Fund on September 12, 2024 and sell it today you would earn a total of 932.00 from holding Regional Bank Fund or generate 42.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matson Money Equity vs. Regional Bank Fund
Performance |
| Timeline |
| Matson Money Equity |
| Regional Bank |
Matson Money and Regional Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matson Money and Regional Bank
The main advantage of trading using opposite Matson Money and Regional Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matson Money position performs unexpectedly, Regional 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 Regional Bank will offset losses from the drop in Regional Bank's long position.| Matson Money vs. Vanguard Total Stock | Matson Money vs. Vanguard 500 Index | Matson Money vs. Vanguard Total Stock | Matson Money vs. Vanguard Total Stock |
| Regional Bank vs. Blackrock Inflation Protected | Regional Bank vs. Aqr Managed Futures | Regional Bank vs. Short Duration Inflation | Regional Bank vs. Ab Bond Inflation |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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