Correlation Between MBank SA and X Trade

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

By analyzing existing cross correlation between mBank SA and X Trade Brokers, you can compare the effects of market volatilities on MBank SA and X Trade 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 MBank SA with a short position of X Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of MBank SA and X Trade.

Diversification Opportunities for MBank SA and X Trade

-0.74

Correlation Coefficient

MBank SA  X Trade

Pay attention - limited upside

The 3 months correlation between MBank and XTB is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding mBank SA and X Trade Brokers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Trade Brokers and MBank SA 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 mBank SA are associated (or correlated) with X Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Trade Brokers has no effect on the direction of MBank SA i.e., MBank SA and X Trade go up and down completely randomly.

Pair Corralation between MBank SA and X Trade

Assuming the 90 days trading horizon MBank SA is expected to generate 2.5 times less return on investment than X Trade. But when comparing it to its historical volatility, mBank SA is 1.02 times less risky than X Trade. It trades about 0.07 of its potential returns per unit of risk. X Trade Brokers is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  7,152  in X Trade Brokers on October 12, 2024 and sell it today you would earn a total of  408.00  from holding X Trade Brokers or generate 5.7% return on investment over 90 days.

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

mBank SA  vs.  X Trade Brokers

mBank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days mBank SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

X Trade Brokers

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in X Trade Brokers are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, X Trade reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MBank SA and X Trade

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

The idea behind mBank SA and X Trade Brokers 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 CEOs Directory module to screen CEOs from public companies around the world.