Correlation Between Bank Polska and MBank SA
Can any of the company-specific risk be diversified away by investing in both Bank Polska 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 Bank Polska and MBank SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Polska Kasa and mBank SA, you can compare the effects of market volatilities on Bank Polska 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 Bank Polska with a short position of MBank SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Polska and MBank SA.
Diversification Opportunities for Bank Polska and MBank SA
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and MBank is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank Polska Kasa and mBank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on mBank SA and Bank Polska 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 Polska Kasa 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 Bank Polska i.e., Bank Polska and MBank SA go up and down completely randomly.
Pair Corralation between Bank Polska and MBank SA
Assuming the 90 days trading horizon Bank Polska Kasa is expected to generate 1.0 times more return on investment than MBank SA. However, Bank Polska is 1.0 times more volatile than mBank SA. It trades about 0.2 of its potential returns per unit of risk. mBank SA is currently generating about 0.11 per unit of risk. If you would invest 13,965 in Bank Polska Kasa on October 22, 2024 and sell it today you would earn a total of 625.00 from holding Bank Polska Kasa or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Polska Kasa vs. mBank SA
Performance |
| Timeline |
| Bank Polska Kasa |
| mBank SA |
Bank Polska and MBank SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Polska and MBank SA
The main advantage of trading using opposite Bank Polska and MBank SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Polska 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.| Bank Polska vs. Creotech Instruments SA | Bank Polska vs. SOFTWARE MANSION SPOLKA | Bank Polska vs. Saule Technologies SA | Bank Polska vs. GreenX Metals |
| MBank SA vs. TEN SQUARE GAMES | MBank SA vs. Marie Brizard Wine | MBank SA vs. Medicofarma Biotech SA | MBank SA vs. Gaming Factory SA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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