Correlation Between Bank Central and MBT Bancshares
Can any of the company-specific risk be diversified away by investing in both Bank Central and MBT Bancshares 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 Bank Central and MBT Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and MBT Bancshares, you can compare the effects of market volatilities on Bank Central and MBT Bancshares 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 Bank Central with a short position of MBT Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and MBT Bancshares.
Diversification Opportunities for Bank Central and MBT Bancshares
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and MBT is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and MBT Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBT Bancshares and Bank Central 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 Bank Central Asia are associated (or correlated) with MBT Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBT Bancshares has no effect on the direction of Bank Central i.e., Bank Central and MBT Bancshares go up and down completely randomly.
Pair Corralation between Bank Central and MBT Bancshares
Assuming the 90 days horizon Bank Central Asia is expected to under-perform the MBT Bancshares. In addition to that, Bank Central is 2.22 times more volatile than MBT Bancshares. It trades about -0.22 of its total potential returns per unit of risk. MBT Bancshares is currently generating about 0.22 per unit of volatility. If you would invest 1,900 in MBT Bancshares on September 1, 2024 and sell it today you would earn a total of 55.00 from holding MBT Bancshares or generate 2.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Central Asia vs. MBT Bancshares
Performance |
| Timeline |
| Bank Central Asia |
| MBT Bancshares |
Bank Central and MBT Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and MBT Bancshares
The main advantage of trading using opposite Bank Central and MBT Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, MBT Bancshares 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 MBT Bancshares will offset losses from the drop in MBT Bancshares' long position.| Bank Central vs. Piraeus Bank SA | Bank Central vs. Turkiye Garanti Bankasi | Bank Central vs. Delhi Bank Corp | Bank Central vs. Uwharrie Capital Corp |
| MBT Bancshares vs. Huntington Bancshares Incorporated | MBT Bancshares vs. KeyCorp | MBT Bancshares vs. Bank of Idaho | MBT Bancshares vs. Citizens Financial Corp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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