Correlation Between Mercantile Bank and United Tennessee
Can any of the company-specific risk be diversified away by investing in both Mercantile Bank and United Tennessee 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 United Tennessee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercantile Bank and United Tennessee Bankshares, you can compare the effects of market volatilities on Mercantile Bank and United Tennessee 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 United Tennessee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercantile Bank and United Tennessee.
Diversification Opportunities for Mercantile Bank and United Tennessee
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mercantile and United is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mercantile Bank and United Tennessee Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Tennessee Ban 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 United Tennessee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Tennessee Ban has no effect on the direction of Mercantile Bank i.e., Mercantile Bank and United Tennessee go up and down completely randomly.
Pair Corralation between Mercantile Bank and United Tennessee
If you would invest 1,750 in United Tennessee Bankshares on October 22, 2024 and sell it today you would earn a total of 0.00 from holding United Tennessee Bankshares or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 5.56% |
| Values | Daily Returns |
Mercantile Bank vs. United Tennessee Bankshares
Performance |
| Timeline |
| Mercantile Bank |
| United Tennessee Ban |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Mercantile Bank and United Tennessee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercantile Bank and United Tennessee
The main advantage of trading using opposite Mercantile Bank and United Tennessee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercantile Bank position performs unexpectedly, United Tennessee 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 United Tennessee will offset losses from the drop in United Tennessee'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 |
| United Tennessee vs. United Bancorporation of | United Tennessee vs. Tri County Financial Group | United Tennessee vs. Quaint Oak 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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