Correlation Between MB Securities and Riverway Management

Can any of the company-specific risk be diversified away by investing in both MB Securities and Riverway Management 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 MB Securities and Riverway Management into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MB Securities JSC and Riverway Management JSC, you can compare the effects of market volatilities on MB Securities and Riverway Management 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 MB Securities with a short position of Riverway Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of MB Securities and Riverway Management.

Diversification Opportunities for MB Securities and Riverway Management

0.59

Correlation Coefficient

MB Securities  Riverway Management

Very weak diversification

The 3 months correlation between MBS and Riverway is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding MB Securities JSC and Riverway Management JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riverway Management JSC and MB Securities 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 MB Securities JSC are associated (or correlated) with Riverway Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riverway Management JSC has no effect on the direction of MB Securities i.e., MB Securities and Riverway Management go up and down completely randomly.

Pair Corralation between MB Securities and Riverway Management

Assuming the 90 days trading horizon MB Securities JSC is expected to generate 0.9 times more return on investment than Riverway Management. However, MB Securities JSC is 1.12 times less risky than Riverway Management. It trades about 0.08 of its potential returns per unit of risk. Riverway Management JSC is currently generating about 0.01 per unit of risk. If you would invest  1,494,305  in MB Securities JSC on September 30, 2024 and sell it today you would earn a total of  1,385,695  from holding MB Securities JSC or generate 92.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	89.76%
Values	Daily Returns

MB Securities JSC  vs.  Riverway Management JSC

MB Securities JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MB Securities JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Riverway Management JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riverway Management JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with MB Securities and Riverway Management

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

The idea behind MB Securities JSC and Riverway Management JSC 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.