Correlation Between MCB Bank and Jubilee Life
Can any of the company-specific risk be diversified away by investing in both MCB Bank and Jubilee Life 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 MCB Bank and Jubilee Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MCB Bank and Jubilee Life Insurance, you can compare the effects of market volatilities on MCB Bank and Jubilee Life 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 MCB Bank with a short position of Jubilee Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB Bank and Jubilee Life.
Diversification Opportunities for MCB Bank and Jubilee Life
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MCB and Jubilee is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding MCB Bank and Jubilee Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jubilee Life Insurance and MCB 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 MCB Bank are associated (or correlated) with Jubilee Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jubilee Life Insurance has no effect on the direction of MCB Bank i.e., MCB Bank and Jubilee Life go up and down completely randomly.
Pair Corralation between MCB Bank and Jubilee Life
Assuming the 90 days trading horizon MCB Bank is expected to generate 0.65 times more return on investment than Jubilee Life. However, MCB Bank is 1.54 times less risky than Jubilee Life. It trades about 0.16 of its potential returns per unit of risk. Jubilee Life Insurance is currently generating about 0.04 per unit of risk. If you would invest 8,150 in MCB Bank on August 25, 2024 and sell it today you would earn a total of 18,082 from holding MCB Bank or generate 221.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.47% |
| Values | Daily Returns |
MCB Bank vs. Jubilee Life Insurance
Performance |
| Timeline |
| MCB Bank |
| Jubilee Life Insurance |
MCB Bank and Jubilee Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCB Bank and Jubilee Life
The main advantage of trading using opposite MCB Bank and Jubilee Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCB Bank position performs unexpectedly, Jubilee Life 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 Jubilee Life will offset losses from the drop in Jubilee Life's long position.| MCB Bank vs. Habib Bank | MCB Bank vs. National Bank of | MCB Bank vs. Meezan Bank | MCB Bank vs. Bank Al Habib |
| Jubilee Life vs. MCB Investment Manag | Jubilee Life vs. JS Investments | Jubilee Life vs. National Bank of | Jubilee Life vs. Amreli Steels |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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