Correlation Between MT Bank and URU Metals

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

Diversification Opportunities for MT Bank and URU Metals

0.55

Correlation Coefficient

MT Bank  URU Metals

Very weak diversification

The 3 months correlation between 0JW2 and URU is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank Corp and URU Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URU Metals 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 URU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URU Metals has no effect on the direction of MT Bank i.e., MT Bank and URU Metals go up and down completely randomly.

Pair Corralation between MT Bank and URU Metals

Assuming the 90 days trading horizon MT Bank Corp is expected to generate 0.42 times more return on investment than URU Metals. However, MT Bank Corp is 2.4 times less risky than URU Metals. It trades about -0.45 of its potential returns per unit of risk. URU Metals is currently generating about -0.27 per unit of risk. If you would invest  19,706  in MT Bank Corp on December 10, 2024 and sell it today you would lose (2,238) from holding MT Bank Corp or give up 11.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

MT Bank Corp  vs.  URU Metals

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

URU Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days URU Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with MT Bank and URU Metals

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

The idea behind MT Bank Corp and URU Metals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.