Correlation Between TPL Insurance and MCB Bank
Can any of the company-specific risk be diversified away by investing in both TPL Insurance and MCB 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 TPL Insurance and MCB Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPL Insurance and MCB Bank, you can compare the effects of market volatilities on TPL Insurance and MCB 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 TPL Insurance with a short position of MCB Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPL Insurance and MCB Bank.
Diversification Opportunities for TPL Insurance and MCB Bank
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between TPL and MCB is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding TPL Insurance and MCB Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCB Bank and TPL Insurance 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 TPL Insurance are associated (or correlated) with MCB Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCB Bank has no effect on the direction of TPL Insurance i.e., TPL Insurance and MCB Bank go up and down completely randomly.
Pair Corralation between TPL Insurance and MCB Bank
Assuming the 90 days trading horizon TPL Insurance is expected to under-perform the MCB Bank. In addition to that, TPL Insurance is 1.57 times more volatile than MCB Bank. It trades about -0.03 of its total potential returns per unit of risk. MCB Bank is currently generating about 0.16 per unit of volatility. If you would invest 8,260 in MCB Bank on November 28, 2024 and sell it today you would earn a total of 20,746 from holding MCB Bank or generate 251.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.05% |
| Values | Daily Returns |
TPL Insurance vs. MCB Bank
Performance |
| Timeline |
| TPL Insurance |
| MCB Bank |
TPL Insurance and MCB Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPL Insurance and MCB Bank
The main advantage of trading using opposite TPL Insurance and MCB Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPL Insurance position performs unexpectedly, MCB 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 MCB Bank will offset losses from the drop in MCB Bank's long position.| TPL Insurance vs. Sindh Modaraba Management | TPL Insurance vs. ITTEFAQ Iron Industries | TPL Insurance vs. Jubilee Life Insurance | TPL Insurance vs. Crescent Star Insurance |
| MCB Bank vs. Jubilee Life Insurance | MCB Bank vs. Big Bird Foods | MCB Bank vs. Dost Steels | MCB Bank vs. Air Link Communication |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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