Correlation Between Burke Herbert and Muncy Bank

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

By analyzing existing cross correlation between Burke Herbert Financial and Muncy Bank Financial, you can compare the effects of market volatilities on Burke Herbert and Muncy 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 Burke Herbert with a short position of Muncy Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burke Herbert and Muncy Bank.

Diversification Opportunities for Burke Herbert and Muncy Bank

0.6

Correlation Coefficient

Burke Herbert  Muncy Bank

Poor diversification

The 3 months correlation between Burke and Muncy is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Burke Herbert Financial and Muncy Bank Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muncy Bank Financial and Burke Herbert 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 Burke Herbert Financial are associated (or correlated) with Muncy Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muncy Bank Financial has no effect on the direction of Burke Herbert i.e., Burke Herbert and Muncy Bank go up and down completely randomly.

Pair Corralation between Burke Herbert and Muncy Bank

If you would invest  6,439  in Burke Herbert Financial on September 3, 2024 and sell it today you would earn a total of  489.00  from holding Burke Herbert Financial or generate 7.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Burke Herbert Financial  vs.  Muncy Bank Financial

Burke Herbert Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Burke Herbert Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Burke Herbert may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Muncy Bank Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Muncy Bank Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Muncy Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Burke Herbert and Muncy Bank

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

The idea behind Burke Herbert Financial and Muncy Bank Financial 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.