Correlation Between Mauch Chunk and MBT Bancshares

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

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

Diversification Opportunities for Mauch Chunk and MBT Bancshares

-0.22

Correlation Coefficient

Mauch Chunk  MBT Bancshares

Very good diversification

The 3 months correlation between Mauch and MBT is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mauch Chunk Trust and MBT Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBT Bancshares and Mauch Chunk 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 Mauch Chunk Trust are associated (or correlated) with MBT Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBT Bancshares has no effect on the direction of Mauch Chunk i.e., Mauch Chunk and MBT Bancshares go up and down completely randomly.

Pair Corralation between Mauch Chunk and MBT Bancshares

Given the investment horizon of 90 days Mauch Chunk Trust is expected to under-perform the MBT Bancshares. In addition to that, Mauch Chunk is 3.24 times more volatile than MBT Bancshares. It trades about -0.02 of its total potential returns per unit of risk. MBT Bancshares is currently generating about 0.23 per unit of volatility. If you would invest  1,825  in MBT Bancshares on September 2, 2024 and sell it today you would earn a total of  130.00  from holding MBT Bancshares or generate 7.12% return on investment over 90 days.

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

Mauch Chunk Trust  vs.  MBT Bancshares

Mauch Chunk Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mauch Chunk Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Mauch Chunk is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

MBT Bancshares

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MBT Bancshares are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, MBT Bancshares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mauch Chunk and MBT Bancshares

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

The idea behind Mauch Chunk Trust and MBT Bancshares 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.