Correlation Between Merchants Marine and North Dallas
Can any of the company-specific risk be diversified away by investing in both Merchants Marine and North Dallas 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 North Dallas 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 North Dallas Bank, you can compare the effects of market volatilities on Merchants Marine and North Dallas 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 North Dallas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merchants Marine and North Dallas.
Diversification Opportunities for Merchants Marine and North Dallas
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merchants and North is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Merchants Marine Bancorp and North Dallas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Dallas Bank 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 North Dallas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Dallas Bank has no effect on the direction of Merchants Marine i.e., Merchants Marine and North Dallas go up and down completely randomly.
Pair Corralation between Merchants Marine and North Dallas
Given the investment horizon of 90 days Merchants Marine Bancorp is expected to generate 2.07 times more return on investment than North Dallas. However, Merchants Marine is 2.07 times more volatile than North Dallas Bank. It trades about 0.02 of its potential returns per unit of risk. North Dallas Bank is currently generating about -0.06 per unit of risk. If you would invest 4,075 in Merchants Marine Bancorp on November 2, 2024 and sell it today you would earn a total of 150.00 from holding Merchants Marine Bancorp or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.13% |
| Values | Daily Returns |
Merchants Marine Bancorp vs. North Dallas Bank
Performance |
| Timeline |
| Merchants Marine Bancorp |
| North Dallas Bank |
Merchants Marine and North Dallas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merchants Marine and North Dallas
The main advantage of trading using opposite Merchants Marine and North Dallas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merchants Marine position performs unexpectedly, North Dallas 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 North Dallas will offset losses from the drop in North Dallas' long position.| Merchants Marine vs. Mission Valley Bancorp | Merchants Marine vs. Harbor Bankshares | Merchants Marine vs. Oconee Financial | Merchants Marine vs. MF Bancorp |
| North Dallas vs. CCSB Financial Corp | North Dallas vs. Delhi Bank Corp | North Dallas vs. Bank of Utica | North Dallas vs. First Community |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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