Correlation Between Mutual Of and Regional Bank
Can any of the company-specific risk be diversified away by investing in both Mutual Of 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 Mutual Of and Regional Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mutual Of America and Regional Bank Fund, you can compare the effects of market volatilities on Mutual Of 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 Mutual Of with a short position of Regional Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mutual Of and Regional Bank.
Diversification Opportunities for Mutual Of and Regional Bank
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mutual and Regional is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Mutual Of America and Regional Bank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Bank and Mutual Of 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 Mutual Of America 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 Mutual Of i.e., Mutual Of and Regional Bank go up and down completely randomly.
Pair Corralation between Mutual Of and Regional Bank
Assuming the 90 days horizon Mutual Of is expected to generate 1.56 times less return on investment than Regional Bank. But when comparing it to its historical volatility, Mutual Of America is 1.51 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 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,678 in Regional Bank Fund on October 28, 2024 and sell it today you would earn a total of 74.00 from holding Regional Bank Fund or generate 2.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mutual Of America vs. Regional Bank Fund
Performance |
| Timeline |
| Mutual Of America |
| Regional Bank |
Mutual Of and Regional Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mutual Of and Regional Bank
The main advantage of trading using opposite Mutual Of and Regional Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mutual Of 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.| Mutual Of vs. Investec Emerging Markets | Mutual Of vs. Doubleline Emerging Markets | Mutual Of vs. Siit Emerging Markets | Mutual Of vs. Growth Strategy Fund |
| Regional Bank vs. Siit High Yield | Regional Bank vs. Americafirst Monthly Risk On | Regional Bank vs. Artisan High Income | Regional Bank vs. Needham Aggressive Growth |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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