Correlation Between Mifflinburg Bancorp and PSB Holdings
Can any of the company-specific risk be diversified away by investing in both Mifflinburg Bancorp and PSB Holdings 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 Mifflinburg Bancorp and PSB Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mifflinburg Bancorp and PSB Holdings, you can compare the effects of market volatilities on Mifflinburg Bancorp and PSB Holdings 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 Mifflinburg Bancorp with a short position of PSB Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mifflinburg Bancorp and PSB Holdings.
Diversification Opportunities for Mifflinburg Bancorp and PSB Holdings
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mifflinburg and PSB is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Mifflinburg Bancorp and PSB Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSB Holdings and Mifflinburg 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 Mifflinburg Bancorp are associated (or correlated) with PSB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSB Holdings has no effect on the direction of Mifflinburg Bancorp i.e., Mifflinburg Bancorp and PSB Holdings go up and down completely randomly.
Pair Corralation between Mifflinburg Bancorp and PSB Holdings
Given the investment horizon of 90 days Mifflinburg Bancorp is expected to under-perform the PSB Holdings. In addition to that, Mifflinburg Bancorp is 1.86 times more volatile than PSB Holdings. It trades about -0.12 of its total potential returns per unit of risk. PSB Holdings is currently generating about 0.36 per unit of volatility. If you would invest 2,575 in PSB Holdings on September 1, 2024 and sell it today you would earn a total of 215.00 from holding PSB Holdings or generate 8.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mifflinburg Bancorp vs. PSB Holdings
Performance |
| Timeline |
| Mifflinburg Bancorp |
| PSB Holdings |
Mifflinburg Bancorp and PSB Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mifflinburg Bancorp and PSB Holdings
The main advantage of trading using opposite Mifflinburg Bancorp and PSB Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mifflinburg Bancorp position performs unexpectedly, PSB Holdings 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 PSB Holdings will offset losses from the drop in PSB Holdings' long position.| Mifflinburg Bancorp vs. Mauch Chunk Trust | Mifflinburg Bancorp vs. Juniata Valley Financial | Mifflinburg Bancorp vs. MBT Bancshares |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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