Correlation Between Harbor Bankshares and MNB Holdings

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

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

Diversification Opportunities for Harbor Bankshares and MNB Holdings

-0.03

Correlation Coefficient

Harbor Bankshares  MNB Holdings

Good diversification

The 3 months correlation between Harbor and MNB is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Bankshares and MNB Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MNB Holdings Corp and Harbor Bankshares 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 Harbor Bankshares are associated (or correlated) with MNB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MNB Holdings Corp has no effect on the direction of Harbor Bankshares i.e., Harbor Bankshares and MNB Holdings go up and down completely randomly.

Pair Corralation between Harbor Bankshares and MNB Holdings

Given the investment horizon of 90 days Harbor Bankshares is expected to generate 1.66 times more return on investment than MNB Holdings. However, Harbor Bankshares is 1.66 times more volatile than MNB Holdings Corp. It trades about 0.13 of its potential returns per unit of risk. MNB Holdings Corp is currently generating about 0.1 per unit of risk. If you would invest  1,310  in Harbor Bankshares on December 28, 2024 and sell it today you would earn a total of  451.00  from holding Harbor Bankshares or generate 34.43% return on investment over 90 days.

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

Harbor Bankshares  vs.  MNB Holdings Corp

Harbor Bankshares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Bankshares are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, Harbor Bankshares disclosed solid returns over the last few months and may actually be approaching a breakup point.

MNB Holdings Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MNB Holdings Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental drivers, MNB Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harbor Bankshares and MNB Holdings

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

The idea behind Harbor Bankshares and MNB Holdings Corp 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.