Correlation Between Crazy Woman and Merchants Marine

Can any of the company-specific risk be diversified away by investing in both Crazy Woman and Merchants Marine 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 Crazy Woman and Merchants Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crazy Woman Creek and Merchants Marine Bancorp, you can compare the effects of market volatilities on Crazy Woman and Merchants Marine 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 Crazy Woman with a short position of Merchants Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crazy Woman and Merchants Marine.

Diversification Opportunities for Crazy Woman and Merchants Marine

0.65

Correlation Coefficient

Crazy Woman  Merchants Marine

Poor diversification

The 3 months correlation between Crazy and Merchants is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Crazy Woman Creek and Merchants Marine Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants Marine Bancorp and Crazy Woman 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 Crazy Woman Creek are associated (or correlated) with Merchants Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants Marine Bancorp has no effect on the direction of Crazy Woman i.e., Crazy Woman and Merchants Marine go up and down completely randomly.

Pair Corralation between Crazy Woman and Merchants Marine

If you would invest  4,245  in Merchants Marine Bancorp on October 26, 2024 and sell it today you would earn a total of  105.00  from holding Merchants Marine Bancorp or generate 2.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.56%
Values	Daily Returns

Crazy Woman Creek  vs.  Merchants Marine Bancorp

Crazy Woman Creek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crazy Woman Creek has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Crazy Woman is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Merchants Marine Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merchants Marine Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Crazy Woman and Merchants Marine

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

The idea behind Crazy Woman Creek and Merchants Marine Bancorp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.