Correlation Between Merchants Marine and Security Federal
Can any of the company-specific risk be diversified away by investing in both Merchants Marine 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 Merchants Marine and Security Federal 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 Security Federal, you can compare the effects of market volatilities on Merchants Marine 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 Merchants Marine with a short position of Security Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merchants Marine and Security Federal.
Diversification Opportunities for Merchants Marine and Security Federal
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merchants and Security is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Merchants Marine Bancorp and Security Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Federal 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 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 Merchants Marine i.e., Merchants Marine and Security Federal go up and down completely randomly.
Pair Corralation between Merchants Marine and Security Federal
Given the investment horizon of 90 days Merchants Marine Bancorp is expected to under-perform the Security Federal. But the otc stock apears to be less risky and, when comparing its historical volatility, Merchants Marine Bancorp is 4.85 times less risky than Security Federal. The otc stock trades about -0.35 of its potential returns per unit of risk. The Security Federal is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,700 in Security Federal on October 21, 2024 and sell it today you would earn a total of 300.00 from holding Security Federal or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Merchants Marine Bancorp vs. Security Federal
Performance |
| Timeline |
| Merchants Marine Bancorp |
| Security Federal |
Merchants Marine and Security Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merchants Marine and Security Federal
The main advantage of trading using opposite Merchants Marine and Security Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merchants Marine 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.| Merchants Marine vs. Mission Valley Bancorp | Merchants Marine vs. Harbor Bankshares | Merchants Marine vs. Oconee Financial | Merchants Marine vs. MF Bancorp |
| Security Federal vs. MF Bancorp | Security Federal vs. Merchants Marine Bancorp | Security Federal vs. MNB Holdings Corp | Security Federal vs. United Bancorporation of |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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