Correlation Between MBank SA and Carlson Investments
Can any of the company-specific risk be diversified away by investing in both MBank SA and Carlson Investments 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 MBank SA and Carlson Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between mBank SA and Carlson Investments SA, you can compare the effects of market volatilities on MBank SA and Carlson Investments 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 MBank SA with a short position of Carlson Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of MBank SA and Carlson Investments.
Diversification Opportunities for MBank SA and Carlson Investments
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MBank and Carlson is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding mBank SA and Carlson Investments SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlson Investments and MBank SA 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 mBank SA are associated (or correlated) with Carlson Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlson Investments has no effect on the direction of MBank SA i.e., MBank SA and Carlson Investments go up and down completely randomly.
Pair Corralation between MBank SA and Carlson Investments
Assuming the 90 days trading horizon mBank SA is expected to generate 0.44 times more return on investment than Carlson Investments. However, mBank SA is 2.29 times less risky than Carlson Investments. It trades about 0.05 of its potential returns per unit of risk. Carlson Investments SA is currently generating about -0.07 per unit of risk. If you would invest 34,500 in mBank SA on August 31, 2024 and sell it today you would earn a total of 18,500 from holding mBank SA or generate 53.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
mBank SA vs. Carlson Investments SA
Performance |
| Timeline |
| mBank SA |
| Carlson Investments |
MBank SA and Carlson Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MBank SA and Carlson Investments
The main advantage of trading using opposite MBank SA and Carlson Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MBank SA position performs unexpectedly, Carlson Investments 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 Carlson Investments will offset losses from the drop in Carlson Investments' long position.| MBank SA vs. Santander Bank Polska | MBank SA vs. Bank Handlowy w | MBank SA vs. Bank Millennium SA | MBank SA vs. Bank Ochrony rodowiska |
| Carlson Investments vs. Asseco Business Solutions | Carlson Investments vs. Detalion Games SA | Carlson Investments vs. Asseco South Eastern | Carlson Investments vs. CFI Holding SA |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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