Correlation Between NYSE Composite and Metropolitan Bank
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Metropolitan Bank 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 NYSE Composite and Metropolitan Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Metropolitan Bank and, you can compare the effects of market volatilities on NYSE Composite and Metropolitan Bank 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 NYSE Composite with a short position of Metropolitan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Metropolitan Bank.
Diversification Opportunities for NYSE Composite and Metropolitan Bank
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Metropolitan is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Metropolitan Bank and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank and NYSE Composite 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 NYSE Composite are associated (or correlated) with Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank has no effect on the direction of NYSE Composite i.e., NYSE Composite and Metropolitan Bank go up and down completely randomly.
Pair Corralation between NYSE Composite and Metropolitan Bank
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.22 times less return on investment than Metropolitan Bank. But when comparing it to its historical volatility, NYSE Composite is 3.95 times less risky than Metropolitan Bank. It trades about 0.07 of its potential returns per unit of risk. Metropolitan Bank and is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,432 in Metropolitan Bank and on September 3, 2024 and sell it today you would earn a total of 1,342 from holding Metropolitan Bank and or generate 93.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
NYSE Composite vs. Metropolitan Bank and
Performance |
| Timeline |
NYSE Composite and Metropolitan Bank Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Metropolitan Bank and
Pair trading matchups for Metropolitan Bank
Pair Trading with NYSE Composite and Metropolitan Bank
The main advantage of trading using opposite NYSE Composite and Metropolitan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Metropolitan Bank 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 Metropolitan Bank will offset losses from the drop in Metropolitan Bank's long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| Metropolitan Bank vs. Cedar Realty Trust | Metropolitan Bank vs. AKITA Drilling | Metropolitan Bank vs. National Vision Holdings | Metropolitan Bank vs. Integrated Drilling Equipment |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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