Correlation Between Bank Millennium and MW Trade
Can any of the company-specific risk be diversified away by investing in both Bank Millennium and MW Trade 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 Bank Millennium and MW Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Millennium SA and MW Trade SA, you can compare the effects of market volatilities on Bank Millennium and MW Trade 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 Bank Millennium with a short position of MW Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Millennium and MW Trade.
Diversification Opportunities for Bank Millennium and MW Trade
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and MWT is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bank Millennium SA and MW Trade SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MW Trade SA and Bank Millennium 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 Bank Millennium SA are associated (or correlated) with MW Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MW Trade SA has no effect on the direction of Bank Millennium i.e., Bank Millennium and MW Trade go up and down completely randomly.
Pair Corralation between Bank Millennium and MW Trade
Assuming the 90 days trading horizon Bank Millennium SA is expected to generate 0.7 times more return on investment than MW Trade. However, Bank Millennium SA is 1.43 times less risky than MW Trade. It trades about -0.06 of its potential returns per unit of risk. MW Trade SA is currently generating about -0.26 per unit of risk. If you would invest 877.00 in Bank Millennium SA on August 28, 2024 and sell it today you would lose (53.00) from holding Bank Millennium SA or give up 6.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Millennium SA vs. MW Trade SA
Performance |
| Timeline |
| Bank Millennium SA |
| MW Trade SA |
Bank Millennium and MW Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Millennium and MW Trade
The main advantage of trading using opposite Bank Millennium and MW Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Millennium position performs unexpectedly, MW Trade 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 MW Trade will offset losses from the drop in MW Trade's long position.The idea behind Bank Millennium SA and MW Trade SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| MW Trade vs. Asseco Business Solutions | MW Trade vs. Detalion Games SA | MW Trade vs. Asseco South Eastern | MW Trade vs. CFI Holding SA |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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