Correlation Between Muncy Bank and LCNB
Can any of the company-specific risk be diversified away by investing in both Muncy Bank and LCNB 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 Muncy Bank and LCNB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Muncy Bank Financial and LCNB Corporation, you can compare the effects of market volatilities on Muncy Bank and LCNB 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 Muncy Bank with a short position of LCNB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Muncy Bank and LCNB.
Diversification Opportunities for Muncy Bank and LCNB
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Muncy and LCNB is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Muncy Bank Financial and LCNB Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LCNB and Muncy 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 Muncy Bank Financial are associated (or correlated) with LCNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LCNB has no effect on the direction of Muncy Bank i.e., Muncy Bank and LCNB go up and down completely randomly.
Pair Corralation between Muncy Bank and LCNB
Given the investment horizon of 90 days Muncy Bank Financial is expected to generate 1.07 times more return on investment than LCNB. However, Muncy Bank is 1.07 times more volatile than LCNB Corporation. It trades about 0.14 of its potential returns per unit of risk. LCNB Corporation is currently generating about 0.04 per unit of risk. If you would invest 3,238 in Muncy Bank Financial on August 29, 2024 and sell it today you would earn a total of 567.00 from holding Muncy Bank Financial or generate 17.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 13.74% |
| Values | Daily Returns |
Muncy Bank Financial vs. LCNB Corp.
Performance |
| Timeline |
| Muncy Bank Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| LCNB |
Muncy Bank and LCNB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Muncy Bank and LCNB
The main advantage of trading using opposite Muncy Bank and LCNB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Muncy Bank position performs unexpectedly, LCNB 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 LCNB will offset losses from the drop in LCNB's long position.| Muncy Bank vs. Main Street Financial | Muncy Bank vs. Susquehanna Community Financial | Muncy Bank vs. First Keystone Corp | Muncy Bank vs. Mifflinburg Bancorp |
| LCNB vs. Affinity Bancshares | LCNB vs. Main Street Financial | LCNB vs. Mainstreet Bank | LCNB vs. Oak Valley 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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