Correlation Between Rmb Mendon and Emerald Banking

Can any of the company-specific risk be diversified away by investing in both Rmb Mendon and Emerald Banking 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 Rmb Mendon and Emerald Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rmb Mendon Financial and Emerald Banking And, you can compare the effects of market volatilities on Rmb Mendon and Emerald Banking 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 Rmb Mendon with a short position of Emerald Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rmb Mendon and Emerald Banking.

Diversification Opportunities for Rmb Mendon and Emerald Banking

0.96

Correlation Coefficient

Rmb Mendon  Emerald Banking

Almost no diversification

The 3 months correlation between Rmb and Emerald is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Rmb Mendon Financial and Emerald Banking And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Banking And and Rmb Mendon 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 Rmb Mendon Financial are associated (or correlated) with Emerald Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Banking And has no effect on the direction of Rmb Mendon i.e., Rmb Mendon and Emerald Banking go up and down completely randomly.

Pair Corralation between Rmb Mendon and Emerald Banking

Assuming the 90 days horizon Rmb Mendon is expected to generate 1.26 times less return on investment than Emerald Banking. In addition to that, Rmb Mendon is 1.04 times more volatile than Emerald Banking And. It trades about 0.04 of its total potential returns per unit of risk. Emerald Banking And is currently generating about 0.05 per unit of volatility. If you would invest  1,955  in Emerald Banking And on September 12, 2024 and sell it today you would earn a total of  857.00  from holding Emerald Banking And or generate 43.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Rmb Mendon Financial  vs.  Emerald Banking And

Rmb Mendon Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rmb Mendon Financial are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Rmb Mendon showed solid returns over the last few months and may actually be approaching a breakup point.

Emerald Banking And

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Banking And are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Emerald Banking showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rmb Mendon and Emerald Banking

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

The idea behind Rmb Mendon Financial and Emerald Banking And 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.