Correlation Between Northway Financial and Magyar Bancorp
Can any of the company-specific risk be diversified away by investing in both Northway Financial 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 Northway Financial and Magyar Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northway Financial and Magyar Bancorp, you can compare the effects of market volatilities on Northway Financial 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 Northway Financial with a short position of Magyar Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northway Financial and Magyar Bancorp.
Diversification Opportunities for Northway Financial and Magyar Bancorp
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Northway and Magyar is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Northway Financial and Magyar Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Bancorp and Northway Financial 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 Northway Financial 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 Northway Financial i.e., Northway Financial and Magyar Bancorp go up and down completely randomly.
Pair Corralation between Northway Financial and Magyar Bancorp
If you would invest 1,111 in Magyar Bancorp on September 1, 2024 and sell it today you would earn a total of 307.00 from holding Magyar Bancorp or generate 27.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 0.54% |
| Values | Daily Returns |
Northway Financial vs. Magyar Bancorp
Performance |
| Timeline |
| Northway Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Magyar Bancorp |
Northway Financial and Magyar Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northway Financial and Magyar Bancorp
The main advantage of trading using opposite Northway Financial and Magyar Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northway Financial 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.| Northway Financial vs. Katahdin Bankshares Corp | Northway Financial vs. First Northern Community | Northway Financial vs. Pacific Financial Corp | Northway Financial vs. QNB Corp |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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