Correlation Between MT Bank and LINKBANCORP
Can any of the company-specific risk be diversified away by investing in both MT Bank and LINKBANCORP 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 MT Bank and LINKBANCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MT Bank and LINKBANCORP, you can compare the effects of market volatilities on MT Bank and LINKBANCORP 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 MT Bank with a short position of LINKBANCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and LINKBANCORP.
Diversification Opportunities for MT Bank and LINKBANCORP
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MTB and LINKBANCORP is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP and MT Bank 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 MT Bank are associated (or correlated) with LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of MT Bank i.e., MT Bank and LINKBANCORP go up and down completely randomly.
Pair Corralation between MT Bank and LINKBANCORP
Considering the 90-day investment horizon MT Bank is expected to generate 1.17 times more return on investment than LINKBANCORP. However, MT Bank is 1.17 times more volatile than LINKBANCORP. It trades about 0.21 of its potential returns per unit of risk. LINKBANCORP is currently generating about 0.12 per unit of risk. If you would invest 19,468 in MT Bank on September 1, 2024 and sell it today you would earn a total of 2,531 from holding MT Bank or generate 13.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MT Bank vs. LINKBANCORP
Performance |
| Timeline |
| MT Bank |
| LINKBANCORP |
MT Bank and LINKBANCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MT Bank and LINKBANCORP
The main advantage of trading using opposite MT Bank and LINKBANCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank position performs unexpectedly, LINKBANCORP 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 LINKBANCORP will offset losses from the drop in LINKBANCORP's long position.| MT Bank vs. US Bancorp | MT Bank vs. Truist Financial Corp | MT Bank vs. Fifth Third Bancorp | MT Bank vs. KeyCorp |
| LINKBANCORP vs. Home Federal Bancorp | LINKBANCORP vs. Lake Shore Bancorp | LINKBANCORP vs. Community West Bancshares | LINKBANCORP vs. Magyar 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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