Correlation Between Metropolitan Bank and Converge Information

Can any of the company-specific risk be diversified away by investing in both Metropolitan Bank and Converge Information 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 Converge Information 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 Converge Information Communications, you can compare the effects of market volatilities on Metropolitan Bank and Converge Information 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 Converge Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Bank and Converge Information.

Diversification Opportunities for Metropolitan Bank and Converge Information

-0.44

Correlation Coefficient

Metropolitan Bank  Converge Information

Very good diversification

The 3 months correlation between Metropolitan and Converge is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Bank Trust and Converge Information Communica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Information 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 Converge Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Information has no effect on the direction of Metropolitan Bank i.e., Metropolitan Bank and Converge Information go up and down completely randomly.

Pair Corralation between Metropolitan Bank and Converge Information

Assuming the 90 days trading horizon Metropolitan Bank Trust is expected to under-perform the Converge Information. But the stock apears to be less risky and, when comparing its historical volatility, Metropolitan Bank Trust is 1.12 times less risky than Converge Information. The stock trades about 0.0 of its potential returns per unit of risk. The Converge Information Communications is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,646  in Converge Information Communications on November 19, 2024 and sell it today you would earn a total of  130.00  from holding Converge Information Communications or generate 7.9% return on investment over 90 days.

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

Metropolitan Bank Trust  vs.  Converge Information Communica

Metropolitan Bank Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metropolitan Bank Trust has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Converge Information

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Converge Information Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Converge Information may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Metropolitan Bank and Converge Information

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

The idea behind Metropolitan Bank Trust and Converge Information Communications 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.