Correlation Between Magyar Bancorp and German American
Can any of the company-specific risk be diversified away by investing in both Magyar Bancorp and German American 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 Magyar Bancorp and German American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magyar Bancorp and German American Bancorp, you can compare the effects of market volatilities on Magyar Bancorp and German American 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 Magyar Bancorp with a short position of German American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magyar Bancorp and German American.
Diversification Opportunities for Magyar Bancorp and German American
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magyar and German is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Magyar Bancorp and German American Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on German American Bancorp and Magyar 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 Magyar Bancorp are associated (or correlated) with German American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of German American Bancorp has no effect on the direction of Magyar Bancorp i.e., Magyar Bancorp and German American go up and down completely randomly.
Pair Corralation between Magyar Bancorp and German American
Given the investment horizon of 90 days Magyar Bancorp is expected to generate 1.34 times less return on investment than German American. But when comparing it to its historical volatility, Magyar Bancorp is 1.13 times less risky than German American. It trades about 0.07 of its potential returns per unit of risk. German American Bancorp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,807 in German American Bancorp on September 2, 2024 and sell it today you would earn a total of 1,691 from holding German American Bancorp or generate 60.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.66% |
| Values | Daily Returns |
Magyar Bancorp vs. German American Bancorp
Performance |
| Timeline |
| Magyar Bancorp |
| German American Bancorp |
Magyar Bancorp and German American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magyar Bancorp and German American
The main advantage of trading using opposite Magyar Bancorp and German American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magyar Bancorp position performs unexpectedly, German American 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 German American will offset losses from the drop in German American's long position.| Magyar Bancorp vs. Home Federal Bancorp | Magyar Bancorp vs. Community West Bancshares | Magyar Bancorp vs. First Financial Northwest | Magyar Bancorp vs. First Northwest Bancorp |
| German American vs. Lakeland Financial | German American vs. Great Southern Bancorp | German American vs. First Merchants | German American vs. First Financial |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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