Correlation Between Coeur DAlene and MF Bancorp

Can any of the company-specific risk be diversified away by investing in both Coeur DAlene and MF 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 Coeur DAlene and MF Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coeur dAlene Bancorp and MF Bancorp, you can compare the effects of market volatilities on Coeur DAlene and MF 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 Coeur DAlene with a short position of MF Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coeur DAlene and MF Bancorp.

Diversification Opportunities for Coeur DAlene and MF Bancorp

0.29

Correlation Coefficient

Coeur DAlene  MF Bancorp

Modest diversification

The 3 months correlation between Coeur and MFBP is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Coeur dAlene Bancorp and MF Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MF Bancorp and Coeur DAlene 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 Coeur dAlene Bancorp are associated (or correlated) with MF Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MF Bancorp has no effect on the direction of Coeur DAlene i.e., Coeur DAlene and MF Bancorp go up and down completely randomly.

Pair Corralation between Coeur DAlene and MF Bancorp

Given the investment horizon of 90 days Coeur DAlene is expected to generate 1.39 times less return on investment than MF Bancorp. But when comparing it to its historical volatility, Coeur dAlene Bancorp is 31.77 times less risky than MF Bancorp. It trades about 0.22 of its potential returns per unit of risk. MF Bancorp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,899  in MF Bancorp on September 25, 2024 and sell it today you would earn a total of  1.00  from holding MF Bancorp or generate 0.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Coeur dAlene Bancorp  vs.  MF Bancorp

Coeur dAlene Bancorp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coeur dAlene Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Coeur DAlene may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MF Bancorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MF Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal fundamental drivers, MF Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Coeur DAlene and MF Bancorp

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

The idea behind Coeur dAlene Bancorp and MF Bancorp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.