Correlation Between Merchants Marine and Harbor Bankshares
Can any of the company-specific risk be diversified away by investing in both Merchants Marine and Harbor Bankshares 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 Harbor Bankshares 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 Harbor Bankshares, you can compare the effects of market volatilities on Merchants Marine and Harbor Bankshares 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 Harbor Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merchants Marine and Harbor Bankshares.
Diversification Opportunities for Merchants Marine and Harbor Bankshares
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merchants and Harbor is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Merchants Marine Bancorp and Harbor Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Bankshares 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 Harbor Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Bankshares has no effect on the direction of Merchants Marine i.e., Merchants Marine and Harbor Bankshares go up and down completely randomly.
Pair Corralation between Merchants Marine and Harbor Bankshares
Given the investment horizon of 90 days Merchants Marine Bancorp is expected to under-perform the Harbor Bankshares. But the otc stock apears to be less risky and, when comparing its historical volatility, Merchants Marine Bancorp is 12.8 times less risky than Harbor Bankshares. The otc stock trades about -0.35 of its potential returns per unit of risk. The Harbor Bankshares is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,328 in Harbor Bankshares on October 21, 2024 and sell it today you would earn a total of 472.00 from holding Harbor Bankshares or generate 35.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merchants Marine Bancorp vs. Harbor Bankshares
Performance |
| Timeline |
| Merchants Marine Bancorp |
| Harbor Bankshares |
Merchants Marine and Harbor Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merchants Marine and Harbor Bankshares
The main advantage of trading using opposite Merchants Marine and Harbor Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merchants Marine position performs unexpectedly, Harbor Bankshares 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 Harbor Bankshares will offset losses from the drop in Harbor Bankshares' long position.| Merchants Marine vs. Mission Valley Bancorp | Merchants Marine vs. Harbor Bankshares | Merchants Marine vs. Oconee Financial | Merchants Marine vs. MF Bancorp |
| Harbor Bankshares vs. MNB Holdings Corp | Harbor Bankshares vs. Oconee Financial | Harbor Bankshares vs. Mission Valley Bancorp | Harbor Bankshares vs. Merchants Marine Bancorp |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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