Correlation Between MBANK (BRUSG) and TERADATA

Can any of the company-specific risk be diversified away by investing in both MBANK (BRUSG) and TERADATA 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 MBANK (BRUSG) and TERADATA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MBANK and TERADATA, you can compare the effects of market volatilities on MBANK (BRUSG) and TERADATA 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 MBANK (BRUSG) with a short position of TERADATA. Check out your portfolio center. Please also check ongoing floating volatility patterns of MBANK (BRUSG) and TERADATA.

Diversification Opportunities for MBANK (BRUSG) and TERADATA

-0.39

Correlation Coefficient

MBANK (BRUSG)  TERADATA

Very good diversification

The 3 months correlation between MBANK and TERADATA is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding MBANK and TERADATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TERADATA and MBANK (BRUSG) 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 MBANK are associated (or correlated) with TERADATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TERADATA has no effect on the direction of MBANK (BRUSG) i.e., MBANK (BRUSG) and TERADATA go up and down completely randomly.

Pair Corralation between MBANK (BRUSG) and TERADATA

Assuming the 90 days trading horizon MBANK is expected to generate 1.95 times more return on investment than TERADATA. However, MBANK (BRUSG) is 1.95 times more volatile than TERADATA. It trades about -0.02 of its potential returns per unit of risk. TERADATA is currently generating about -0.1 per unit of risk. If you would invest  12,385  in MBANK on October 9, 2024 and sell it today you would lose (95.00) from holding MBANK or give up 0.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

MBANK  vs.  TERADATA

MBANK (BRUSG)

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MBANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

TERADATA

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with MBANK (BRUSG) and TERADATA

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

The idea behind MBANK and TERADATA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.