Correlation Between New Tech and MBank SA
Can any of the company-specific risk be diversified away by investing in both New Tech and MBank SA 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 New Tech and MBank SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Tech Venture and mBank SA, you can compare the effects of market volatilities on New Tech and MBank SA 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 New Tech with a short position of MBank SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Tech and MBank SA.
Diversification Opportunities for New Tech and MBank SA
Average diversification
The 3 months correlation between New and MBank is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding New Tech Venture and mBank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on mBank SA and New Tech 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 New Tech Venture are associated (or correlated) with MBank SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of mBank SA has no effect on the direction of New Tech i.e., New Tech and MBank SA go up and down completely randomly.
Pair Corralation between New Tech and MBank SA
Assuming the 90 days trading horizon New Tech Venture is expected to generate 2.34 times more return on investment than MBank SA. However, New Tech is 2.34 times more volatile than mBank SA. It trades about 0.01 of its potential returns per unit of risk. mBank SA is currently generating about -0.09 per unit of risk. If you would invest 14.00 in New Tech Venture on September 3, 2024 and sell it today you would lose (1.00) from holding New Tech Venture or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 71.43% |
| Values | Daily Returns |
New Tech Venture vs. mBank SA
Performance |
| Timeline |
| New Tech Venture |
| mBank SA |
New Tech and MBank SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Tech and MBank SA
The main advantage of trading using opposite New Tech and MBank SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Tech position performs unexpectedly, MBank SA 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 MBank SA will offset losses from the drop in MBank SA's long position.| New Tech vs. GreenX Metals | New Tech vs. SOFTWARE MANSION SPOLKA | New Tech vs. Play2Chill SA | New Tech vs. Skyline Investment SA |
| MBank SA vs. UniCredit SpA | MBank SA vs. Santander Bank Polska | MBank SA vs. Bank Polska Kasa | MBank SA vs. Bank Handlowy w |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |