Correlation Between Regional Bank and Rmb Mendon
Can any of the company-specific risk be diversified away by investing in both Regional Bank and Rmb Mendon 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 Regional Bank and Rmb Mendon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Bank Fund and Rmb Mendon Financial, you can compare the effects of market volatilities on Regional Bank and Rmb Mendon 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 Regional Bank with a short position of Rmb Mendon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Bank and Rmb Mendon.
Diversification Opportunities for Regional Bank and Rmb Mendon
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Regional and Rmb is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Regional Bank Fund and Rmb Mendon Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rmb Mendon Financial and Regional Bank 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 Regional Bank Fund are associated (or correlated) with Rmb Mendon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rmb Mendon Financial has no effect on the direction of Regional Bank i.e., Regional Bank and Rmb Mendon go up and down completely randomly.
Pair Corralation between Regional Bank and Rmb Mendon
Assuming the 90 days horizon Regional Bank Fund is expected to generate 1.11 times more return on investment than Rmb Mendon. However, Regional Bank is 1.11 times more volatile than Rmb Mendon Financial. It trades about 0.13 of its potential returns per unit of risk. Rmb Mendon Financial is currently generating about 0.13 per unit of risk. If you would invest 2,875 in Regional Bank Fund on September 2, 2024 and sell it today you would earn a total of 507.00 from holding Regional Bank Fund or generate 17.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Bank Fund vs. Rmb Mendon Financial
Performance |
| Timeline |
| Regional Bank |
| Rmb Mendon Financial |
Regional Bank and Rmb Mendon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Bank and Rmb Mendon
The main advantage of trading using opposite Regional Bank and Rmb Mendon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Bank position performs unexpectedly, Rmb Mendon 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 Rmb Mendon will offset losses from the drop in Rmb Mendon's long position.| Regional Bank vs. Regional Bank Fund | Regional Bank vs. Multimanager Lifestyle Moderate | Regional Bank vs. Multimanager Lifestyle Balanced | Regional Bank vs. Multimanager Lifestyle Aggressive |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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