Correlation Between Security National and Merchants Bancorp
Can any of the company-specific risk be diversified away by investing in both Security National and Merchants 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 Security National and Merchants Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Security National Financial and Merchants Bancorp, you can compare the effects of market volatilities on Security National and Merchants 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 Security National with a short position of Merchants Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Security National and Merchants Bancorp.
Diversification Opportunities for Security National and Merchants Bancorp
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Security and Merchants is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Security National Financial and Merchants Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants Bancorp and Security National 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 Security National Financial are associated (or correlated) with Merchants Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants Bancorp has no effect on the direction of Security National i.e., Security National and Merchants Bancorp go up and down completely randomly.
Pair Corralation between Security National and Merchants Bancorp
Assuming the 90 days horizon Security National Financial is expected to generate 0.57 times more return on investment than Merchants Bancorp. However, Security National Financial is 1.76 times less risky than Merchants Bancorp. It trades about 0.4 of its potential returns per unit of risk. Merchants Bancorp is currently generating about -0.03 per unit of risk. If you would invest 925.00 in Security National Financial on September 5, 2024 and sell it today you would earn a total of 417.00 from holding Security National Financial or generate 45.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Security National Financial vs. Merchants Bancorp
Performance |
Timeline |
Security National |
Merchants Bancorp |
Security National and Merchants Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Security National and Merchants Bancorp
The main advantage of trading using opposite Security National and Merchants Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Security National position performs unexpectedly, Merchants 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 Merchants Bancorp will offset losses from the drop in Merchants Bancorp's long position.Security National vs. Guild Holdings Co | Security National vs. Encore Capital Group | Security National vs. PennyMac Finl Svcs | Security National vs. CNFinance Holdings |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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