Correlation Between MF Bancorp and North Dallas
Can any of the company-specific risk be diversified away by investing in both MF Bancorp and North Dallas 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 MF Bancorp and North Dallas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MF Bancorp and North Dallas Bank, you can compare the effects of market volatilities on MF Bancorp and North Dallas 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 MF Bancorp with a short position of North Dallas. Check out your portfolio center. Please also check ongoing floating volatility patterns of MF Bancorp and North Dallas.
Diversification Opportunities for MF Bancorp and North Dallas
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MFBP and North is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding MF Bancorp and North Dallas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Dallas Bank and MF Bancorp 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 MF Bancorp are associated (or correlated) with North Dallas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Dallas Bank has no effect on the direction of MF Bancorp i.e., MF Bancorp and North Dallas go up and down completely randomly.
Pair Corralation between MF Bancorp and North Dallas
Given the investment horizon of 90 days MF Bancorp is expected to generate 1.88 times more return on investment than North Dallas. However, MF Bancorp is 1.88 times more volatile than North Dallas Bank. It trades about 0.0 of its potential returns per unit of risk. North Dallas Bank is currently generating about -0.06 per unit of risk. If you would invest 2,426 in MF Bancorp on November 2, 2024 and sell it today you would lose (426.00) from holding MF Bancorp or give up 17.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 72.84% |
| Values | Daily Returns |
MF Bancorp vs. North Dallas Bank
Performance |
| Timeline |
| MF Bancorp |
| North Dallas Bank |
MF Bancorp and North Dallas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MF Bancorp and North Dallas
The main advantage of trading using opposite MF Bancorp and North Dallas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MF Bancorp position performs unexpectedly, North Dallas 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 North Dallas will offset losses from the drop in North Dallas' long position.| MF Bancorp vs. Citizens Bancshares Corp | MF Bancorp vs. Harbor Bankshares | MF Bancorp vs. United Bancorporation of | MF Bancorp vs. KS Bancorp |
| North Dallas vs. CCSB Financial Corp | North Dallas vs. Delhi Bank Corp | North Dallas vs. Bank of Utica | North Dallas vs. First Community |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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