Correlation Between Mechanics Bank and First National
Can any of the company-specific risk be diversified away by investing in both Mechanics Bank and First National 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 Mechanics Bank and First National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mechanics Bank and First National Bank, you can compare the effects of market volatilities on Mechanics Bank and First National 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 Mechanics Bank with a short position of First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mechanics Bank and First National.
Diversification Opportunities for Mechanics Bank and First National
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Mechanics and First is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Mechanics Bank and First National Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Bank and Mechanics 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 Mechanics Bank are associated (or correlated) with First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Bank has no effect on the direction of Mechanics Bank i.e., Mechanics Bank and First National go up and down completely randomly.
Pair Corralation between Mechanics Bank and First National
If you would invest 21,000 in First National Bank on August 31, 2024 and sell it today you would earn a total of 3,125 from holding First National Bank or generate 14.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Mechanics Bank vs. First National Bank
Performance |
| Timeline |
| Mechanics Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First National Bank |
Mechanics Bank and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mechanics Bank and First National
The main advantage of trading using opposite Mechanics Bank and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mechanics Bank position performs unexpectedly, First National 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 First National will offset losses from the drop in First National's long position.| Mechanics Bank vs. Merchants Marine Bancorp | Mechanics Bank vs. MNB Holdings Corp | Mechanics Bank vs. Oconee Financial | Mechanics Bank vs. Harbor Bankshares |
| First National vs. IF Bancorp | First National vs. LINKBANCORP | First National vs. Pathfinder Bancorp | First National vs. First Keystone 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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