Correlation Between Mission Valley and MNB Holdings
Can any of the company-specific risk be diversified away by investing in both Mission Valley and MNB Holdings 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 Mission Valley and MNB Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mission Valley Bancorp and MNB Holdings Corp, you can compare the effects of market volatilities on Mission Valley and MNB Holdings 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 Mission Valley with a short position of MNB Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mission Valley and MNB Holdings.
Diversification Opportunities for Mission Valley and MNB Holdings
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mission and MNB is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mission Valley Bancorp and MNB Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MNB Holdings Corp and Mission Valley 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 Mission Valley Bancorp are associated (or correlated) with MNB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MNB Holdings Corp has no effect on the direction of Mission Valley i.e., Mission Valley and MNB Holdings go up and down completely randomly.
Pair Corralation between Mission Valley and MNB Holdings
Given the investment horizon of 90 days Mission Valley Bancorp is expected to under-perform the MNB Holdings. In addition to that, Mission Valley is 3.6 times more volatile than MNB Holdings Corp. It trades about -0.19 of its total potential returns per unit of risk. MNB Holdings Corp is currently generating about -0.23 per unit of volatility. If you would invest 2,500 in MNB Holdings Corp on November 2, 2024 and sell it today you would lose (49.00) from holding MNB Holdings Corp or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mission Valley Bancorp vs. MNB Holdings Corp
Performance |
| Timeline |
| Mission Valley Bancorp |
| MNB Holdings Corp |
Mission Valley and MNB Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mission Valley and MNB Holdings
The main advantage of trading using opposite Mission Valley and MNB Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mission Valley position performs unexpectedly, MNB Holdings 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 MNB Holdings will offset losses from the drop in MNB Holdings' long position.The idea behind Mission Valley Bancorp and MNB Holdings Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| MNB Holdings vs. Harbor Bankshares | MNB Holdings vs. Oconee Financial | MNB Holdings vs. Mission Valley Bancorp | MNB Holdings vs. MF 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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