Correlation Between GreenBank Capital and Mentor Capital

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

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

Diversification Opportunities for GreenBank Capital and Mentor Capital

0.25

Correlation Coefficient

GreenBank Capital  Mentor Capital

Modest diversification

The 3 months correlation between GreenBank and Mentor is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding GreenBank Capital and Mentor Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mentor Capital and GreenBank 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 GreenBank Capital are associated (or correlated) with Mentor Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mentor Capital has no effect on the direction of GreenBank Capital i.e., GreenBank Capital and Mentor Capital go up and down completely randomly.

Pair Corralation between GreenBank Capital and Mentor Capital

Assuming the 90 days horizon GreenBank Capital is expected to generate 1.19 times more return on investment than Mentor Capital. However, GreenBank Capital is 1.19 times more volatile than Mentor Capital. It trades about 0.04 of its potential returns per unit of risk. Mentor Capital is currently generating about 0.05 per unit of risk. If you would invest  1.21  in GreenBank Capital on September 4, 2024 and sell it today you would lose (0.34) from holding GreenBank Capital or give up 28.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

GreenBank Capital  vs.  Mentor Capital

GreenBank Capital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GreenBank Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental drivers, GreenBank Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Mentor Capital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mentor Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Mentor Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GreenBank Capital and Mentor Capital

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

The idea behind GreenBank Capital and Mentor Capital 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.