Correlation Between MT Bank and Premier Financial
Can any of the company-specific risk be diversified away by investing in both MT Bank and Premier Financial 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 Premier Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MT Bank and Premier Financial Corp, you can compare the effects of market volatilities on MT Bank and Premier Financial 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 Premier Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and Premier Financial.
Diversification Opportunities for MT Bank and Premier Financial
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MTB and Premier is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank and Premier Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Financial Corp 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 Premier Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Financial Corp has no effect on the direction of MT Bank i.e., MT Bank and Premier Financial go up and down completely randomly.
Pair Corralation between MT Bank and Premier Financial
Considering the 90-day investment horizon MT Bank is expected to generate 0.8 times more return on investment than Premier Financial. However, MT Bank is 1.25 times less risky than Premier Financial. It trades about 0.21 of its potential returns per unit of risk. Premier Financial Corp is currently generating about 0.17 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MT Bank vs. Premier Financial Corp
Performance |
| Timeline |
| MT Bank |
| Premier Financial Corp |
MT Bank and Premier Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MT Bank and Premier Financial
The main advantage of trading using opposite MT Bank and Premier Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank position performs unexpectedly, Premier Financial 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 Premier Financial will offset losses from the drop in Premier Financial's long position.| MT Bank vs. US Bancorp | MT Bank vs. Truist Financial Corp | MT Bank vs. Fifth Third Bancorp | MT Bank vs. KeyCorp |
| Premier Financial vs. Bankwell Financial Group | Premier Financial vs. Middlefield Banc | Premier Financial vs. Civista Bancshares | Premier Financial vs. Primis 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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