Correlation Between Kish Bancorp and Mountain Pacific

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

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

Diversification Opportunities for Kish Bancorp and Mountain Pacific

-0.54

Correlation Coefficient

Kish Bancorp  Mountain Pacific

Excellent diversification

The 3 months correlation between Kish and Mountain is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kish Bancorp and Mountain Pacific Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain Pacific Bancorp and Kish Bancorp 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 Kish Bancorp are associated (or correlated) with Mountain Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain Pacific Bancorp has no effect on the direction of Kish Bancorp i.e., Kish Bancorp and Mountain Pacific go up and down completely randomly.

Pair Corralation between Kish Bancorp and Mountain Pacific

Given the investment horizon of 90 days Kish Bancorp is expected to under-perform the Mountain Pacific. In addition to that, Kish Bancorp is 1.55 times more volatile than Mountain Pacific Bancorp. It trades about -0.03 of its total potential returns per unit of risk. Mountain Pacific Bancorp is currently generating about 0.11 per unit of volatility. If you would invest  1,130  in Mountain Pacific Bancorp on December 28, 2024 and sell it today you would earn a total of  70.00  from holding Mountain Pacific Bancorp or generate 6.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.94%
Values	Daily Returns

Kish Bancorp  vs.  Mountain Pacific Bancorp

Kish Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kish Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kish Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mountain Pacific Bancorp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mountain Pacific Bancorp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Mountain Pacific may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kish Bancorp and Mountain Pacific

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

The idea behind Kish Bancorp and Mountain Pacific 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.