Correlation Between MBank SA and Echo Investment
Can any of the company-specific risk be diversified away by investing in both MBank SA and Echo Investment 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 Echo Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between mBank SA and Echo Investment SA, you can compare the effects of market volatilities on MBank SA and Echo Investment 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 Echo Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of MBank SA and Echo Investment.
Diversification Opportunities for MBank SA and Echo Investment
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MBank and Echo is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding mBank SA and Echo Investment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echo Investment SA 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 Echo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echo Investment SA has no effect on the direction of MBank SA i.e., MBank SA and Echo Investment go up and down completely randomly.
Pair Corralation between MBank SA and Echo Investment
Assuming the 90 days trading horizon mBank SA is expected to under-perform the Echo Investment. In addition to that, MBank SA is 1.44 times more volatile than Echo Investment SA. It trades about -0.15 of its total potential returns per unit of risk. Echo Investment SA is currently generating about 0.03 per unit of volatility. If you would invest 440.00 in Echo Investment SA on August 24, 2024 and sell it today you would earn a total of 3.00 from holding Echo Investment SA or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
mBank SA vs. Echo Investment SA
Performance |
| Timeline |
| mBank SA |
| Echo Investment SA |
MBank SA and Echo Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MBank SA and Echo Investment
The main advantage of trading using opposite MBank SA and Echo Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MBank SA position performs unexpectedly, Echo Investment 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 Echo Investment will offset losses from the drop in Echo Investment's long position.| MBank SA vs. UniCredit SpA | MBank SA vs. Santander Bank Polska | MBank SA vs. ING Bank lski | MBank SA vs. Bank Handlowy w |
| Echo Investment vs. Poznanska Korporacja Budowlana | Echo Investment vs. Esotiq Henderson SA | Echo Investment vs. Toya SA | Echo Investment vs. Betacom 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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