Correlation Between Mercantile Bank and National Bank
Can any of the company-specific risk be diversified away by investing in both Mercantile Bank and National Bank 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 National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercantile Bank and National Bank Holdings, you can compare the effects of market volatilities on Mercantile Bank and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercantile Bank and National Bank.
Diversification Opportunities for Mercantile Bank and National Bank
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mercantile and National is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Mercantile Bank and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of Mercantile Bank i.e., Mercantile Bank and National Bank go up and down completely randomly.
Pair Corralation between Mercantile Bank and National Bank
Given the investment horizon of 90 days Mercantile Bank is expected to generate 1.23 times more return on investment than National Bank. However, Mercantile Bank is 1.23 times more volatile than National Bank Holdings. It trades about 0.17 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.11 per unit of risk. If you would invest 4,377 in Mercantile Bank on August 25, 2024 and sell it today you would earn a total of 662.00 from holding Mercantile Bank or generate 15.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercantile Bank vs. National Bank Holdings
Performance |
| Timeline |
| Mercantile Bank |
| National Bank Holdings |
Mercantile Bank and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercantile Bank and National Bank
The main advantage of trading using opposite Mercantile Bank and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercantile Bank position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank'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 |
| National Bank vs. First Community | National Bank vs. Community West Bancshares | National Bank vs. First Financial Northwest | National Bank vs. First Northwest Bancorp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Global Correlations Find global opportunities by holding instruments from different markets |