Correlation Between Metro Bank and Tetragon Financial
Can any of the company-specific risk be diversified away by investing in both Metro Bank and Tetragon 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 Metro Bank and Tetragon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Bank PLC and Tetragon Financial Group, you can compare the effects of market volatilities on Metro Bank and Tetragon 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 Metro Bank with a short position of Tetragon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Bank and Tetragon Financial.
Diversification Opportunities for Metro Bank and Tetragon Financial
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Metro and Tetragon is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Metro Bank PLC and Tetragon Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tetragon Financial and Metro 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 Metro Bank PLC are associated (or correlated) with Tetragon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tetragon Financial has no effect on the direction of Metro Bank i.e., Metro Bank and Tetragon Financial go up and down completely randomly.
Pair Corralation between Metro Bank and Tetragon Financial
Assuming the 90 days trading horizon Metro Bank is expected to generate 1.04 times less return on investment than Tetragon Financial. In addition to that, Metro Bank is 1.48 times more volatile than Tetragon Financial Group. It trades about 0.17 of its total potential returns per unit of risk. Tetragon Financial Group is currently generating about 0.26 per unit of volatility. If you would invest 1,006 in Tetragon Financial Group on November 1, 2024 and sell it today you would earn a total of 539.00 from holding Tetragon Financial Group or generate 53.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Bank PLC vs. Tetragon Financial Group
Performance |
| Timeline |
| Metro Bank PLC |
| Tetragon Financial |
Metro Bank and Tetragon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Bank and Tetragon Financial
The main advantage of trading using opposite Metro Bank and Tetragon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Bank position performs unexpectedly, Tetragon 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 Tetragon Financial will offset losses from the drop in Tetragon Financial's long position.| Metro Bank vs. Futura Medical | Metro Bank vs. Nordea Bank Abp | Metro Bank vs. Bankers Investment Trust | Metro Bank vs. Sartorius Stedim Biotech |
| Tetragon Financial vs. GoldMining | Tetragon Financial vs. Empire Metals Limited | Tetragon Financial vs. BW Offshore | Tetragon Financial vs. JB Hunt Transport |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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