Correlation Between Bank Mandiri and First Northern
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and First Northern 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 Mandiri and First Northern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Mandiri Persero and First Northern Community, you can compare the effects of market volatilities on Bank Mandiri and First Northern 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 Mandiri with a short position of First Northern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and First Northern.
Diversification Opportunities for Bank Mandiri and First Northern
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and First is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and First Northern Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Northern Community and Bank Mandiri 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 Mandiri Persero are associated (or correlated) with First Northern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Northern Community has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and First Northern go up and down completely randomly.
Pair Corralation between Bank Mandiri and First Northern
Assuming the 90 days horizon Bank Mandiri is expected to generate 2.26 times less return on investment than First Northern. In addition to that, Bank Mandiri is 1.85 times more volatile than First Northern Community. It trades about 0.02 of its total potential returns per unit of risk. First Northern Community is currently generating about 0.08 per unit of volatility. If you would invest 831.00 in First Northern Community on September 1, 2024 and sell it today you would earn a total of 169.00 from holding First Northern Community or generate 20.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 85.87% |
| Values | Daily Returns |
Bank Mandiri Persero vs. First Northern Community
Performance |
| Timeline |
| Bank Mandiri Persero |
| First Northern Community |
Bank Mandiri and First Northern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and First Northern
The main advantage of trading using opposite Bank Mandiri and First Northern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, First Northern 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 First Northern will offset losses from the drop in First Northern's long position.| Bank Mandiri vs. Piraeus Bank SA | Bank Mandiri vs. Turkiye Garanti Bankasi | Bank Mandiri vs. Delhi Bank Corp | Bank Mandiri vs. Uwharrie Capital Corp |
| First Northern vs. HUMANA INC | First Northern vs. SCOR PK | First Northern vs. Aquagold International | First Northern vs. Thrivent High Yield |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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