Correlation Between 1st Capital and MT Bank
Can any of the company-specific risk be diversified away by investing in both 1st Capital and MT 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 1st Capital and MT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1st Capital Bank and MT Bank Corp, you can compare the effects of market volatilities on 1st Capital and MT 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 1st Capital with a short position of MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st Capital and MT Bank.
Diversification Opportunities for 1st Capital and MT Bank
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between 1st and MTB is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding 1st Capital Bank and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank Corp and 1st Capital 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 1st Capital Bank are associated (or correlated) with MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of 1st Capital i.e., 1st Capital and MT Bank go up and down completely randomly.
Pair Corralation between 1st Capital and MT Bank
Given the investment horizon of 90 days 1st Capital Bank is expected to under-perform the MT Bank. But the otc stock apears to be less risky and, when comparing its historical volatility, 1st Capital Bank is 1.06 times less risky than MT Bank. The otc stock trades about -0.02 of its potential returns per unit of risk. The MT Bank Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 15,548 in MT Bank Corp on January 19, 2024 and sell it today you would lose (1,618) from holding MT Bank Corp or give up 10.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
1st Capital Bank vs. MT Bank Corp
Performance |
| Timeline |
| 1st Capital Bank |
| MT Bank Corp |
1st Capital and MT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1st Capital and MT Bank
The main advantage of trading using opposite 1st Capital and MT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1st Capital position performs unexpectedly, MT 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 MT Bank will offset losses from the drop in MT Bank's long position.| 1st Capital vs. Pfizer Inc | 1st Capital vs. Heartland Financial USA | 1st Capital vs. Conflux Network | 1st Capital vs. Citigroup Capital XIII |
| MT Bank vs. US Bancorp | MT Bank vs. Truist Financial Corp | MT Bank vs. Fifth Third Bancorp | MT Bank vs. KeyCorp |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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