Correlation Between National Bank and Magyar Bancorp
Can any of the company-specific risk be diversified away by investing in both National Bank and Magyar Bancorp 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 National Bank and Magyar Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank Holdings and Magyar Bancorp, you can compare the effects of market volatilities on National Bank and Magyar Bancorp 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 National Bank with a short position of Magyar Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Magyar Bancorp.
Diversification Opportunities for National Bank and Magyar Bancorp
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Magyar is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and Magyar Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Bancorp and National 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 National Bank Holdings are associated (or correlated) with Magyar Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Bancorp has no effect on the direction of National Bank i.e., National Bank and Magyar Bancorp go up and down completely randomly.
Pair Corralation between National Bank and Magyar Bancorp
Given the investment horizon of 90 days National Bank Holdings is expected to generate 1.4 times more return on investment than Magyar Bancorp. However, National Bank is 1.4 times more volatile than Magyar Bancorp. It trades about 0.02 of its potential returns per unit of risk. Magyar Bancorp is currently generating about 0.03 per unit of risk. If you would invest 4,098 in National Bank Holdings on September 2, 2024 and sell it today you would earn a total of 676.00 from holding National Bank Holdings or generate 16.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.99% |
| Values | Daily Returns |
National Bank Holdings vs. Magyar Bancorp
Performance |
| Timeline |
| National Bank Holdings |
| Magyar Bancorp |
National Bank and Magyar Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Magyar Bancorp
The main advantage of trading using opposite National Bank and Magyar Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Magyar Bancorp 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 Magyar Bancorp will offset losses from the drop in Magyar Bancorp's long position.| National Bank vs. First Community | National Bank vs. Community West Bancshares | National Bank vs. First Financial Northwest | National Bank vs. First Northwest Bancorp |
| Magyar Bancorp vs. Home Federal Bancorp | Magyar Bancorp vs. Community West Bancshares | Magyar Bancorp vs. First Financial Northwest | Magyar Bancorp vs. First Northwest 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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