Correlation Between Luther Burbank and Mercantile Bank
Can any of the company-specific risk be diversified away by investing in both Luther Burbank and Mercantile 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 Luther Burbank and Mercantile Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luther Burbank and Mercantile Bank, you can compare the effects of market volatilities on Luther Burbank and Mercantile 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 Luther Burbank with a short position of Mercantile Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luther Burbank and Mercantile Bank.
Diversification Opportunities for Luther Burbank and Mercantile Bank
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Luther and Mercantile is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Luther Burbank and Mercantile Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercantile Bank and Luther Burbank 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 Luther Burbank are associated (or correlated) with Mercantile Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercantile Bank has no effect on the direction of Luther Burbank i.e., Luther Burbank and Mercantile Bank go up and down completely randomly.
Pair Corralation between Luther Burbank and Mercantile Bank
If you would invest 4,377 in Mercantile Bank on August 25, 2024 and sell it today you would earn a total of 662.00 from holding Mercantile Bank or generate 15.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
Luther Burbank vs. Mercantile Bank
Performance |
| Timeline |
| Luther Burbank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Mercantile Bank |
Luther Burbank and Mercantile Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luther Burbank and Mercantile Bank
The main advantage of trading using opposite Luther Burbank and Mercantile Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luther Burbank position performs unexpectedly, Mercantile 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 Mercantile Bank will offset losses from the drop in Mercantile Bank's long position.| Luther Burbank vs. First Community | Luther Burbank vs. Community West Bancshares | Luther Burbank vs. First Financial Northwest | Luther Burbank vs. First Northwest Bancorp |
| Mercantile Bank vs. Great Southern Bancorp | Mercantile Bank vs. First Bancorp | Mercantile Bank vs. MidWestOne Financial Group | Mercantile Bank vs. Lakeland Financial |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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