Correlation Between BankFirst Capital and MNB Holdings

Can any of the company-specific risk be diversified away by investing in both BankFirst Capital and MNB Holdings 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 BankFirst Capital and MNB Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BankFirst Capital and MNB Holdings Corp, you can compare the effects of market volatilities on BankFirst Capital and MNB Holdings 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 BankFirst Capital with a short position of MNB Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankFirst Capital and MNB Holdings.

Diversification Opportunities for BankFirst Capital and MNB Holdings

0.4

Correlation Coefficient

BankFirst Capital  MNB Holdings

Very weak diversification

The 3 months correlation between BankFirst and MNB is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BankFirst Capital and MNB Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MNB Holdings Corp and BankFirst Capital 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 BankFirst Capital are associated (or correlated) with MNB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MNB Holdings Corp has no effect on the direction of BankFirst Capital i.e., BankFirst Capital and MNB Holdings go up and down completely randomly.

Pair Corralation between BankFirst Capital and MNB Holdings

Given the investment horizon of 90 days BankFirst Capital is expected to under-perform the MNB Holdings. In addition to that, BankFirst Capital is 1.31 times more volatile than MNB Holdings Corp. It trades about -0.36 of its total potential returns per unit of risk. MNB Holdings Corp is currently generating about 0.23 per unit of volatility. If you would invest  2,450  in MNB Holdings Corp on October 9, 2024 and sell it today you would earn a total of  50.00  from holding MNB Holdings Corp or generate 2.04% return on investment over 90 days.

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

BankFirst Capital  vs.  MNB Holdings Corp

BankFirst Capital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BankFirst Capital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, BankFirst Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

MNB Holdings Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MNB Holdings Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, MNB Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BankFirst Capital and MNB Holdings

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

The idea behind BankFirst Capital and MNB Holdings 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.