Correlation Between Magyar Bancorp and Plumas Bancorp
Can any of the company-specific risk be diversified away by investing in both Magyar Bancorp and Plumas Bancorp 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 Plumas Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magyar Bancorp and Plumas Bancorp, you can compare the effects of market volatilities on Magyar Bancorp and Plumas Bancorp 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 Plumas Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magyar Bancorp and Plumas Bancorp.
Diversification Opportunities for Magyar Bancorp and Plumas Bancorp
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Magyar and Plumas is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Magyar Bancorp and Plumas Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumas 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 Plumas Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumas Bancorp has no effect on the direction of Magyar Bancorp i.e., Magyar Bancorp and Plumas Bancorp go up and down completely randomly.
Pair Corralation between Magyar Bancorp and Plumas Bancorp
Given the investment horizon of 90 days Magyar Bancorp is expected to generate 1.59 times less return on investment than Plumas Bancorp. But when comparing it to its historical volatility, Magyar Bancorp is 1.46 times less risky than Plumas Bancorp. It trades about 0.1 of its potential returns per unit of risk. Plumas Bancorp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,370 in Plumas Bancorp on September 1, 2024 and sell it today you would earn a total of 1,576 from holding Plumas Bancorp or generate 46.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.87% |
| Values | Daily Returns |
Magyar Bancorp vs. Plumas Bancorp
Performance |
| Timeline |
| Magyar Bancorp |
| Plumas Bancorp |
Magyar Bancorp and Plumas Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magyar Bancorp and Plumas Bancorp
The main advantage of trading using opposite Magyar Bancorp and Plumas Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magyar Bancorp position performs unexpectedly, Plumas Bancorp 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 Plumas Bancorp will offset losses from the drop in Plumas Bancorp'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 |
| Plumas Bancorp vs. Home Federal Bancorp | Plumas Bancorp vs. First Northwest Bancorp | Plumas Bancorp vs. Lake Shore Bancorp | Plumas Bancorp vs. Community West Bancshares |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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