Correlation Between Merchants Marine and Mission Valley
Can any of the company-specific risk be diversified away by investing in both Merchants Marine and Mission Valley 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 Mission Valley 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 Mission Valley Bancorp, you can compare the effects of market volatilities on Merchants Marine and Mission Valley 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 Mission Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merchants Marine and Mission Valley.
Diversification Opportunities for Merchants Marine and Mission Valley
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Merchants and Mission is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Merchants Marine Bancorp and Mission Valley Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mission Valley Bancorp 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 Mission Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mission Valley Bancorp has no effect on the direction of Merchants Marine i.e., Merchants Marine and Mission Valley go up and down completely randomly.
Pair Corralation between Merchants Marine and Mission Valley
Given the investment horizon of 90 days Merchants Marine Bancorp is expected to under-perform the Mission Valley. In addition to that, Merchants Marine is 1.12 times more volatile than Mission Valley Bancorp. It trades about -0.15 of its total potential returns per unit of risk. Mission Valley Bancorp is currently generating about 0.19 per unit of volatility. If you would invest 1,520 in Mission Valley Bancorp on August 30, 2024 and sell it today you would earn a total of 80.00 from holding Mission Valley Bancorp or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Merchants Marine Bancorp vs. Mission Valley Bancorp
Performance |
| Timeline |
| Merchants Marine Bancorp |
| Mission Valley Bancorp |
Merchants Marine and Mission Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merchants Marine and Mission Valley
The main advantage of trading using opposite Merchants Marine and Mission Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merchants Marine position performs unexpectedly, Mission Valley 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 Mission Valley will offset losses from the drop in Mission Valley's long position.| Merchants Marine vs. Mission Valley Bancorp | Merchants Marine vs. Harbor Bankshares | Merchants Marine vs. Oconee Financial | Merchants Marine vs. MF Bancorp |
| Mission Valley vs. Pacific Valley Bank | Mission Valley vs. American Business Bk | Mission Valley vs. Pinnacle Bank | Mission Valley vs. Pacific Financial Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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