Correlation Between MNB Holdings and Security Federal
Can any of the company-specific risk be diversified away by investing in both MNB Holdings and Security Federal 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 MNB Holdings and Security Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MNB Holdings Corp and Security Federal, you can compare the effects of market volatilities on MNB Holdings and Security Federal 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 MNB Holdings with a short position of Security Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of MNB Holdings and Security Federal.
Diversification Opportunities for MNB Holdings and Security Federal
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MNB and Security is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding MNB Holdings Corp and Security Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Federal and MNB Holdings 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 MNB Holdings Corp are associated (or correlated) with Security Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Federal has no effect on the direction of MNB Holdings i.e., MNB Holdings and Security Federal go up and down completely randomly.
Pair Corralation between MNB Holdings and Security Federal
Given the investment horizon of 90 days MNB Holdings is expected to generate 3.86 times less return on investment than Security Federal. But when comparing it to its historical volatility, MNB Holdings Corp is 1.11 times less risky than Security Federal. It trades about 0.01 of its potential returns per unit of risk. Security Federal is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,223 in Security Federal on August 29, 2024 and sell it today you would earn a total of 577.00 from holding Security Federal or generate 25.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 65.9% |
| Values | Daily Returns |
MNB Holdings Corp vs. Security Federal
Performance |
| Timeline |
| MNB Holdings Corp |
| Security Federal |
MNB Holdings and Security Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MNB Holdings and Security Federal
The main advantage of trading using opposite MNB Holdings and Security Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MNB Holdings position performs unexpectedly, Security Federal 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 Security Federal will offset losses from the drop in Security Federal's long position.The idea behind MNB Holdings Corp and Security Federal 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.| Security Federal vs. Invesco High Income | Security Federal vs. Blackrock Muniholdings Ny | Security Federal vs. MFS Investment Grade | Security Federal vs. Federated Premier Municipal |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |