Correlation Between Grand River and Mifflinburg Bancorp

Can any of the company-specific risk be diversified away by investing in both Grand River and Mifflinburg Bancorp 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 Grand River and Mifflinburg Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grand River Commerce and Mifflinburg Bancorp, you can compare the effects of market volatilities on Grand River and Mifflinburg Bancorp 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 Grand River with a short position of Mifflinburg Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand River and Mifflinburg Bancorp.

Diversification Opportunities for Grand River and Mifflinburg Bancorp

0.27

Correlation Coefficient

Grand River  Mifflinburg Bancorp

Modest diversification

The 3 months correlation between Grand and Mifflinburg is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Grand River Commerce and Mifflinburg Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mifflinburg Bancorp and Grand River 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 Grand River Commerce are associated (or correlated) with Mifflinburg Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mifflinburg Bancorp has no effect on the direction of Grand River i.e., Grand River and Mifflinburg Bancorp go up and down completely randomly.

Pair Corralation between Grand River and Mifflinburg Bancorp

Given the investment horizon of 90 days Grand River Commerce is expected to generate 1.66 times more return on investment than Mifflinburg Bancorp. However, Grand River is 1.66 times more volatile than Mifflinburg Bancorp. It trades about 0.13 of its potential returns per unit of risk. Mifflinburg Bancorp is currently generating about -0.12 per unit of risk. If you would invest  285.00  in Grand River Commerce on September 5, 2024 and sell it today you would earn a total of  25.00  from holding Grand River Commerce or generate 8.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Grand River Commerce  vs.  Mifflinburg Bancorp

Grand River Commerce

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grand River Commerce are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Grand River may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mifflinburg Bancorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mifflinburg Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Mifflinburg Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Grand River and Mifflinburg Bancorp

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

The idea behind Grand River Commerce and Mifflinburg 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..