Correlation Between MT Bank and Emclaire Financial

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Can any of the company-specific risk be diversified away by investing in both MT Bank and Emclaire Financial 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 Emclaire Financial 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 Emclaire Financial Corp, you can compare the effects of market volatilities on MT Bank and Emclaire Financial 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 Emclaire Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and Emclaire Financial.

Diversification Opportunities for MT Bank and Emclaire Financial

-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between MTB and Emclaire is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank Corp and Emclaire Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emclaire Financial Corp 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 Emclaire Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emclaire Financial Corp has no effect on the direction of MT Bank i.e., MT Bank and Emclaire Financial go up and down completely randomly.

Pair Corralation between MT Bank and Emclaire Financial

If you would invest  13,744  in MT Bank Corp on December 29, 2023 and sell it today you would earn a total of  736.00  from holding MT Bank Corp or generate 5.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy0.0%
ValuesDaily Returns

MT Bank Corp  vs.  Emclaire Financial Corp

 Performance 
       Timeline  
MT Bank Corp 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in MT Bank Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, MT Bank may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Emclaire Financial Corp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Emclaire Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Emclaire Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MT Bank and Emclaire Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MT Bank and Emclaire Financial

The main advantage of trading using opposite MT Bank and Emclaire Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank position performs unexpectedly, Emclaire Financial 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 Emclaire Financial will offset losses from the drop in Emclaire Financial's long position.
The idea behind MT Bank Corp and Emclaire Financial 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.
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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