Correlation Between MBT Bancshares and Dow Jones
Can any of the company-specific risk be diversified away by investing in both MBT Bancshares and Dow Jones 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 MBT Bancshares and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MBT Bancshares and Dow Jones Industrial, you can compare the effects of market volatilities on MBT Bancshares and Dow Jones 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 MBT Bancshares with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of MBT Bancshares and Dow Jones.
Diversification Opportunities for MBT Bancshares and Dow Jones
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MBT and Dow is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding MBT Bancshares and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and MBT Bancshares 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 MBT Bancshares are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of MBT Bancshares i.e., MBT Bancshares and Dow Jones go up and down completely randomly.
Pair Corralation between MBT Bancshares and Dow Jones
Given the investment horizon of 90 days MBT Bancshares is expected to generate 3.18 times less return on investment than Dow Jones. In addition to that, MBT Bancshares is 4.89 times more volatile than Dow Jones Industrial. It trades about 0.0 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of volatility. If you would invest 3,394,710 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 1,034,941 from holding Dow Jones Industrial or generate 30.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 64.59% |
| Values | Daily Returns |
MBT Bancshares vs. Dow Jones Industrial
Performance |
| Timeline |
MBT Bancshares and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
MBT Bancshares
Pair trading matchups for MBT Bancshares
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with MBT Bancshares and Dow Jones
The main advantage of trading using opposite MBT Bancshares and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MBT Bancshares position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| MBT Bancshares vs. Invesco High Income | MBT Bancshares vs. Blackrock Muniholdings Ny | MBT Bancshares vs. MFS Investment Grade | MBT Bancshares vs. Federated Premier Municipal |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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