Correlation Between Main Street and Muncy Bank
Can any of the company-specific risk be diversified away by investing in both Main Street and Muncy Bank 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 Main Street and Muncy Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Financial and Muncy Bank Financial, you can compare the effects of market volatilities on Main Street and Muncy Bank 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 Main Street with a short position of Muncy Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and Muncy Bank.
Diversification Opportunities for Main Street and Muncy Bank
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Main and Muncy is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Financial and Muncy Bank Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muncy Bank Financial and Main Street 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 Main Street Financial are associated (or correlated) with Muncy Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muncy Bank Financial has no effect on the direction of Main Street i.e., Main Street and Muncy Bank go up and down completely randomly.
Pair Corralation between Main Street and Muncy Bank
If you would invest 1,419 in Main Street Financial on August 25, 2024 and sell it today you would earn a total of 1.00 from holding Main Street Financial or generate 0.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.35% |
| Values | Daily Returns |
Main Street Financial vs. Muncy Bank Financial
Performance |
| Timeline |
| Main Street Financial |
| Muncy Bank Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Main Street and Muncy Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and Muncy Bank
The main advantage of trading using opposite Main Street and Muncy Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, Muncy Bank 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 Muncy Bank will offset losses from the drop in Muncy Bank's long position.| Main Street vs. CCFNB Bancorp | Main Street vs. Burke Herbert Financial | Main Street vs. First IC | Main Street vs. Enterprise Financial Services |
| Muncy Bank vs. Main Street Financial | Muncy Bank vs. Susquehanna Community Financial | Muncy Bank vs. First Keystone Corp | Muncy Bank vs. Mifflinburg 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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