Correlation Between MBank SA and Monnari Trade
Can any of the company-specific risk be diversified away by investing in both MBank SA and Monnari Trade 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 Monnari Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between mBank SA and Monnari Trade SA, you can compare the effects of market volatilities on MBank SA and Monnari Trade 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 Monnari Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of MBank SA and Monnari Trade.
Diversification Opportunities for MBank SA and Monnari Trade
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MBank and Monnari is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding mBank SA and Monnari Trade SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monnari Trade 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 Monnari Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monnari Trade SA has no effect on the direction of MBank SA i.e., MBank SA and Monnari Trade go up and down completely randomly.
Pair Corralation between MBank SA and Monnari Trade
Assuming the 90 days trading horizon mBank SA is expected to generate 1.17 times more return on investment than Monnari Trade. However, MBank SA is 1.17 times more volatile than Monnari Trade SA. It trades about 0.05 of its potential returns per unit of risk. Monnari Trade SA is currently generating about 0.02 per unit of risk. If you would invest 37,890 in mBank SA on September 2, 2024 and sell it today you would earn a total of 15,110 from holding mBank SA or generate 39.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
mBank SA vs. Monnari Trade SA
Performance |
| Timeline |
| mBank SA |
| Monnari Trade SA |
MBank SA and Monnari Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MBank SA and Monnari Trade
The main advantage of trading using opposite MBank SA and Monnari Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MBank SA position performs unexpectedly, Monnari Trade 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 Monnari Trade will offset losses from the drop in Monnari Trade's long position.The idea behind mBank SA and Monnari Trade SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Monnari Trade vs. TEN SQUARE GAMES | Monnari Trade vs. GreenX Metals | Monnari Trade vs. True Games Syndicate | Monnari Trade vs. SOFTWARE MANSION SPOLKA |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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