Correlation Between MT Bank and Charter Communications

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

Diversification Opportunities for MT Bank and Charter Communications

0.81

Correlation Coefficient

MT Bank  Charter Communications

Very poor diversification

The 3 months correlation between 0JW2 and Charter is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank Corp and Charter Communications Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of MT Bank i.e., MT Bank and Charter Communications go up and down completely randomly.

Pair Corralation between MT Bank and Charter Communications

Assuming the 90 days trading horizon MT Bank Corp is expected to under-perform the Charter Communications. But the stock apears to be less risky and, when comparing its historical volatility, MT Bank Corp is 1.63 times less risky than Charter Communications. The stock trades about -0.12 of its potential returns per unit of risk. The Charter Communications Cl is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  40,005  in Charter Communications Cl on December 4, 2024 and sell it today you would lose (2,980) from holding Charter Communications Cl or give up 7.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	93.55%
Values	Daily Returns

MT Bank Corp  vs.  Charter Communications Cl

MT Bank Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days MT Bank Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Charter Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charter Communications Cl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with MT Bank and Charter Communications

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

The idea behind MT Bank Corp and Charter Communications Cl 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.