Correlation Between MCB Investment and National Bank
Can any of the company-specific risk be diversified away by investing in both MCB Investment 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 MCB Investment and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MCB Investment Manag and National Bank of, you can compare the effects of market volatilities on MCB Investment 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 MCB Investment with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB Investment and National Bank.
Diversification Opportunities for MCB Investment and National Bank
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MCB and National is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding MCB Investment Manag and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and MCB Investment 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 Investment Manag 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 has no effect on the direction of MCB Investment i.e., MCB Investment and National Bank go up and down completely randomly.
Pair Corralation between MCB Investment and National Bank
Assuming the 90 days trading horizon MCB Investment Manag is expected to generate 1.35 times more return on investment than National Bank. However, MCB Investment is 1.35 times more volatile than National Bank of. It trades about 0.46 of its potential returns per unit of risk. National Bank of is currently generating about 0.27 per unit of risk. If you would invest 4,199 in MCB Investment Manag on September 2, 2024 and sell it today you would earn a total of 1,802 from holding MCB Investment Manag or generate 42.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MCB Investment Manag vs. National Bank of
Performance |
| Timeline |
| MCB Investment Manag |
| National Bank |
MCB Investment and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCB Investment and National Bank
The main advantage of trading using opposite MCB Investment and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCB Investment 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.| MCB Investment vs. Crescent Steel Allied | MCB Investment vs. Unity Foods | MCB Investment vs. Packages | MCB Investment vs. Beco Steel |
| National Bank vs. Masood Textile Mills | National Bank vs. Fauji Foods | National Bank vs. KSB Pumps | National Bank vs. Mari Petroleum |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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