Correlation Between Morgan Co and ZB FINANCIAL

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

By analyzing existing cross correlation between Morgan Co Multi and ZB FINANCIAL HOLDINGS, you can compare the effects of market volatilities on Morgan Co and ZB FINANCIAL 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 Morgan Co with a short position of ZB FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Co and ZB FINANCIAL.

Diversification Opportunities for Morgan Co and ZB FINANCIAL

-0.38

Correlation Coefficient

Morgan Co  ZB FINANCIAL

Very good diversification

The 3 months correlation between Morgan and ZBFH is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Co Multi and ZB FINANCIAL HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZB FINANCIAL HOLDINGS and Morgan Co 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 Morgan Co Multi are associated (or correlated) with ZB FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZB FINANCIAL HOLDINGS has no effect on the direction of Morgan Co i.e., Morgan Co and ZB FINANCIAL go up and down completely randomly.

Pair Corralation between Morgan Co and ZB FINANCIAL

Assuming the 90 days trading horizon Morgan Co Multi is expected to generate 0.27 times more return on investment than ZB FINANCIAL. However, Morgan Co Multi is 3.68 times less risky than ZB FINANCIAL. It trades about -0.24 of its potential returns per unit of risk. ZB FINANCIAL HOLDINGS is currently generating about -0.4 per unit of risk. If you would invest  21,100  in Morgan Co Multi on October 12, 2024 and sell it today you would lose (1,100) from holding Morgan Co Multi or give up 5.21% of portfolio value over 90 days.

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

Morgan Co Multi  vs.  ZB FINANCIAL HOLDINGS

Morgan Co Multi

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Co Multi are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent primary indicators, Morgan Co showed solid returns over the last few months and may actually be approaching a breakup point.

ZB FINANCIAL HOLDINGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZB FINANCIAL HOLDINGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Morgan Co and ZB FINANCIAL

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

The idea behind Morgan Co Multi and ZB FINANCIAL HOLDINGS 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..