Correlation Between MT Bank and Golden Metal
Can any of the company-specific risk be diversified away by investing in both MT Bank and Golden Metal 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 MT Bank and Golden Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MT Bank Corp and Golden Metal Resources, you can compare the effects of market volatilities on MT Bank and Golden Metal 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 MT Bank with a short position of Golden Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and Golden Metal.
Diversification Opportunities for MT Bank and Golden Metal
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 0JW2 and Golden is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank Corp and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal Resources and MT Bank 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 MT Bank Corp are associated (or correlated) with Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of MT Bank i.e., MT Bank and Golden Metal go up and down completely randomly.
Pair Corralation between MT Bank and Golden Metal
Assuming the 90 days trading horizon MT Bank Corp is expected to generate 0.74 times more return on investment than Golden Metal. However, MT Bank Corp is 1.35 times less risky than Golden Metal. It trades about -0.5 of its potential returns per unit of risk. Golden Metal Resources is currently generating about -0.39 per unit of risk. If you would invest 22,167 in MT Bank Corp on September 26, 2024 and sell it today you would lose (3,090) from holding MT Bank Corp or give up 13.94% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
MT Bank Corp vs. Golden Metal Resources
Performance |
Timeline |
MT Bank Corp |
Golden Metal Resources |
MT Bank and Golden Metal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MT Bank and Golden Metal
The main advantage of trading using opposite MT Bank and Golden Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank position performs unexpectedly, Golden Metal 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 Golden Metal will offset losses from the drop in Golden Metal's long position.MT Bank vs. Uniper SE | MT Bank vs. Mulberry Group PLC | MT Bank vs. London Security Plc | MT Bank vs. Triad Group PLC |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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