Correlation Between MT Bank and Eclectic Bar

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

Diversification Opportunities for MT Bank and Eclectic Bar

-0.27

Correlation Coefficient

MT Bank  Eclectic Bar

Very good diversification

The 3 months correlation between 0JW2 and Eclectic is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank Corp and Eclectic Bar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eclectic Bar Group 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 Eclectic Bar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eclectic Bar Group has no effect on the direction of MT Bank i.e., MT Bank and Eclectic Bar go up and down completely randomly.

Pair Corralation between MT Bank and Eclectic Bar

Assuming the 90 days trading horizon MT Bank Corp is expected to under-perform the Eclectic Bar. In addition to that, MT Bank is 9.79 times more volatile than Eclectic Bar Group. It trades about -0.26 of its total potential returns per unit of risk. Eclectic Bar Group is currently generating about 0.3 per unit of volatility. If you would invest  4,660  in Eclectic Bar Group on October 10, 2024 and sell it today you would earn a total of  40.00  from holding Eclectic Bar Group or generate 0.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

MT Bank Corp  vs.  Eclectic Bar Group

MT Bank Corp

Risk-Adjusted Performance

5 of 100

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. In spite of comparatively uncertain basic indicators, MT Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Eclectic Bar Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eclectic Bar Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Eclectic Bar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MT Bank and Eclectic Bar

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

The idea behind MT Bank Corp and Eclectic Bar Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.