Correlation Between Merchants Bancorp and Merchants Bancorp
Can any of the company-specific risk be diversified away by investing in both Merchants Bancorp and Merchants Bancorp 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 Merchants Bancorp and Merchants Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merchants Bancorp and Merchants Bancorp, you can compare the effects of market volatilities on Merchants Bancorp and Merchants Bancorp 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 Merchants Bancorp with a short position of Merchants Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merchants Bancorp and Merchants Bancorp.
Diversification Opportunities for Merchants Bancorp and Merchants Bancorp
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merchants and Merchants is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Merchants Bancorp and Merchants Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants Bancorp and Merchants Bancorp 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 Merchants Bancorp are associated (or correlated) with Merchants Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants Bancorp has no effect on the direction of Merchants Bancorp i.e., Merchants Bancorp and Merchants Bancorp go up and down completely randomly.
Pair Corralation between Merchants Bancorp and Merchants Bancorp
Assuming the 90 days horizon Merchants Bancorp is expected to generate 2.22 times less return on investment than Merchants Bancorp. But when comparing it to its historical volatility, Merchants Bancorp is 1.08 times less risky than Merchants Bancorp. It trades about 0.02 of its potential returns per unit of risk. Merchants Bancorp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,865 in Merchants Bancorp on August 25, 2024 and sell it today you would earn a total of 675.00 from holding Merchants Bancorp or generate 36.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merchants Bancorp vs. Merchants Bancorp
Performance |
| Timeline |
| Merchants Bancorp |
| Merchants Bancorp |
Merchants Bancorp and Merchants Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merchants Bancorp and Merchants Bancorp
The main advantage of trading using opposite Merchants Bancorp and Merchants Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merchants Bancorp position performs unexpectedly, Merchants Bancorp 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 Merchants Bancorp will offset losses from the drop in Merchants Bancorp's long position.| Merchants Bancorp vs. Merchants Bancorp | Merchants Bancorp vs. Midland States Bancorp | Merchants Bancorp vs. Merchants Bancorp |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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