Correlation Between Metropolitan Bank and Bank of the

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

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

Diversification Opportunities for Metropolitan Bank and Bank of the

0.62

Correlation Coefficient

Metropolitan Bank  Bank of the

Poor diversification

The 3 months correlation between Metropolitan and Bank is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Bank Trust and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the and Metropolitan Bank 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 Metropolitan Bank Trust are associated (or correlated) with Bank of the. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of the has no effect on the direction of Metropolitan Bank i.e., Metropolitan Bank and Bank of the go up and down completely randomly.

Pair Corralation between Metropolitan Bank and Bank of the

Assuming the 90 days trading horizon Metropolitan Bank Trust is expected to generate 1.02 times more return on investment than Bank of the. However, Metropolitan Bank is 1.02 times more volatile than Bank of the. It trades about 0.05 of its potential returns per unit of risk. Bank of the is currently generating about 0.03 per unit of risk. If you would invest  7,235  in Metropolitan Bank Trust on September 2, 2024 and sell it today you would earn a total of  390.00  from holding Metropolitan Bank Trust or generate 5.39% return on investment over 90 days.

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

Metropolitan Bank Trust  vs.  Bank of the

Metropolitan Bank Trust

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metropolitan Bank Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Metropolitan Bank is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bank of the

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of the are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Bank of the is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Metropolitan Bank and Bank of the

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

The idea behind Metropolitan Bank Trust and Bank of the 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.