Correlation Between First Horizon and MNB Holdings

Can any of the company-specific risk be diversified away by investing in both First Horizon and MNB Holdings 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 First Horizon and MNB Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Horizon National and MNB Holdings Corp, you can compare the effects of market volatilities on First Horizon and MNB Holdings 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 First Horizon with a short position of MNB Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Horizon and MNB Holdings.

Diversification Opportunities for First Horizon and MNB Holdings

0.36

Correlation Coefficient

First Horizon  MNB Holdings

Weak diversification

The 3 months correlation between First and MNB is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding First Horizon National and MNB Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MNB Holdings Corp and First Horizon 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 First Horizon National are associated (or correlated) with MNB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MNB Holdings Corp has no effect on the direction of First Horizon i.e., First Horizon and MNB Holdings go up and down completely randomly.

Pair Corralation between First Horizon and MNB Holdings

Considering the 90-day investment horizon First Horizon National is expected to generate 2.88 times more return on investment than MNB Holdings. However, First Horizon is 2.88 times more volatile than MNB Holdings Corp. It trades about 0.17 of its potential returns per unit of risk. MNB Holdings Corp is currently generating about -0.05 per unit of risk. If you would invest  1,582  in First Horizon National on September 4, 2024 and sell it today you would earn a total of  491.00  from holding First Horizon National or generate 31.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

First Horizon National  vs.  MNB Holdings Corp

First Horizon National

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Horizon National are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical indicators, First Horizon displayed solid returns over the last few months and may actually be approaching a breakup point.

MNB Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MNB Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, MNB Holdings is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with First Horizon and MNB Holdings

The main advantage of trading using opposite First Horizon and MNB Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Horizon position performs unexpectedly, MNB Holdings 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 MNB Holdings will offset losses from the drop in MNB Holdings' long position.

The idea behind First Horizon National and MNB Holdings Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.