Correlation Between Mercantile Bank and Mountain Pacific
Can any of the company-specific risk be diversified away by investing in both Mercantile Bank and Mountain Pacific 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 Mercantile Bank and Mountain Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercantile Bank and Mountain Pacific Bancorp, you can compare the effects of market volatilities on Mercantile Bank and Mountain Pacific 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 Mercantile Bank with a short position of Mountain Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercantile Bank and Mountain Pacific.
Diversification Opportunities for Mercantile Bank and Mountain Pacific
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mercantile and Mountain is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Mercantile Bank and Mountain Pacific Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain Pacific Bancorp and Mercantile Bank 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 Mercantile Bank are associated (or correlated) with Mountain Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain Pacific Bancorp has no effect on the direction of Mercantile Bank i.e., Mercantile Bank and Mountain Pacific go up and down completely randomly.
Pair Corralation between Mercantile Bank and Mountain Pacific
Given the investment horizon of 90 days Mercantile Bank is expected to generate 1.51 times more return on investment than Mountain Pacific. However, Mercantile Bank is 1.51 times more volatile than Mountain Pacific Bancorp. It trades about 0.08 of its potential returns per unit of risk. Mountain Pacific Bancorp is currently generating about 0.08 per unit of risk. If you would invest 2,845 in Mercantile Bank on September 2, 2024 and sell it today you would earn a total of 2,160 from holding Mercantile Bank or generate 75.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Mercantile Bank vs. Mountain Pacific Bancorp
Performance |
| Timeline |
| Mercantile Bank |
| Mountain Pacific Bancorp |
Mercantile Bank and Mountain Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercantile Bank and Mountain Pacific
The main advantage of trading using opposite Mercantile Bank and Mountain Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercantile Bank position performs unexpectedly, Mountain Pacific 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 Mountain Pacific will offset losses from the drop in Mountain Pacific's long position.| Mercantile Bank vs. Great Southern Bancorp | Mercantile Bank vs. First Bancorp | Mercantile Bank vs. MidWestOne Financial Group | Mercantile Bank vs. Lakeland Financial |
| Mountain Pacific vs. Piraeus Bank SA | Mountain Pacific vs. Turkiye Garanti Bankasi | Mountain Pacific vs. Uwharrie Capital Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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