Correlation Between Merchants Marine and First IC
Can any of the company-specific risk be diversified away by investing in both Merchants Marine and First IC 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 Merchants Marine and First IC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merchants Marine Bancorp and First IC, you can compare the effects of market volatilities on Merchants Marine and First IC 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 Merchants Marine with a short position of First IC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merchants Marine and First IC.
Diversification Opportunities for Merchants Marine and First IC
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Merchants and First is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Merchants Marine Bancorp and First IC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First IC and Merchants Marine 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 Merchants Marine Bancorp are associated (or correlated) with First IC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First IC has no effect on the direction of Merchants Marine i.e., Merchants Marine and First IC go up and down completely randomly.
Pair Corralation between Merchants Marine and First IC
Given the investment horizon of 90 days Merchants Marine is expected to generate 3.37 times less return on investment than First IC. But when comparing it to its historical volatility, Merchants Marine Bancorp is 2.35 times less risky than First IC. It trades about 0.03 of its potential returns per unit of risk. First IC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 800.00 in First IC on September 3, 2024 and sell it today you would earn a total of 90.00 from holding First IC or generate 11.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Merchants Marine Bancorp vs. First IC
Performance |
| Timeline |
| Merchants Marine Bancorp |
| First IC |
Merchants Marine and First IC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merchants Marine and First IC
The main advantage of trading using opposite Merchants Marine and First IC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merchants Marine position performs unexpectedly, First IC 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 First IC will offset losses from the drop in First IC's long position.| Merchants Marine vs. Mission Valley Bancorp | Merchants Marine vs. Harbor Bankshares | Merchants Marine vs. Oconee Financial | Merchants Marine vs. MF Bancorp |
| First IC vs. CCFNB Bancorp | First IC vs. Glen Burnie Bancorp | First IC vs. Main Street Financial | First IC vs. Enterprise Financial Services |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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