Correlation Between St Galler and MT Bank

Can any of the company-specific risk be diversified away by investing in both St Galler and MT Bank 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 St Galler and MT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between St Galler Kantonalbank and MT Bank Corp, you can compare the effects of market volatilities on St Galler and MT Bank 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 St Galler with a short position of MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of St Galler and MT Bank.

Diversification Opportunities for St Galler and MT Bank

0.59

Correlation Coefficient

St Galler  MT Bank

Very weak diversification

The 3 months correlation between 0QQZ and 0JW2 is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding St Galler Kantonalbank and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank Corp and St Galler 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 St Galler Kantonalbank are associated (or correlated) with MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of St Galler i.e., St Galler and MT Bank go up and down completely randomly.

Pair Corralation between St Galler and MT Bank

Assuming the 90 days trading horizon St Galler is expected to generate 30.63 times less return on investment than MT Bank. But when comparing it to its historical volatility, St Galler Kantonalbank is 2.88 times less risky than MT Bank. It trades about 0.02 of its potential returns per unit of risk. MT Bank Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  17,230  in MT Bank Corp on September 2, 2024 and sell it today you would earn a total of  4,769  from holding MT Bank Corp or generate 27.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.97%
Values	Daily Returns

St Galler Kantonalbank  vs.  MT Bank Corp

St Galler Kantonalbank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in St Galler Kantonalbank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, St Galler is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

MT Bank Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MT Bank Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, MT Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with St Galler and MT Bank

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

The idea behind St Galler Kantonalbank and MT Bank 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.