Correlation Between MF Bancorp and United Bancorporation
Can any of the company-specific risk be diversified away by investing in both MF Bancorp and United Bancorporation 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 United Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MF Bancorp and United Bancorporation of, you can compare the effects of market volatilities on MF Bancorp and United Bancorporation 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 United Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of MF Bancorp and United Bancorporation.
Diversification Opportunities for MF Bancorp and United Bancorporation
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MFBP and United is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding MF Bancorp and United Bancorp. of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bancorporation 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 United Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bancorporation has no effect on the direction of MF Bancorp i.e., MF Bancorp and United Bancorporation go up and down completely randomly.
Pair Corralation between MF Bancorp and United Bancorporation
Given the investment horizon of 90 days MF Bancorp is expected to generate 2.3 times more return on investment than United Bancorporation. However, MF Bancorp is 2.3 times more volatile than United Bancorporation of. It trades about 0.22 of its potential returns per unit of risk. United Bancorporation of is currently generating about 0.06 per unit of risk. If you would invest 1,900 in MF Bancorp on October 21, 2024 and sell it today you would earn a total of 350.00 from holding MF Bancorp or generate 18.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MF Bancorp vs. United Bancorp. of
Performance |
| Timeline |
| MF Bancorp |
| United Bancorporation |
MF Bancorp and United Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MF Bancorp and United Bancorporation
The main advantage of trading using opposite MF Bancorp and United Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MF Bancorp position performs unexpectedly, United Bancorporation 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 Bancorporation will offset losses from the drop in United Bancorporation's long position.| MF Bancorp vs. Citizens Bancshares Corp | MF Bancorp vs. Harbor Bankshares | MF Bancorp vs. United Bancorporation of | MF Bancorp vs. KS Bancorp |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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