Correlation Between Magyar Bancorp and Delhi Bank

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Can any of the company-specific risk be diversified away by investing in both Magyar Bancorp and Delhi Bank 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 Magyar Bancorp and Delhi Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magyar Bancorp and Delhi Bank Corp, you can compare the effects of market volatilities on Magyar Bancorp and Delhi Bank 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 Magyar Bancorp with a short position of Delhi Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magyar Bancorp and Delhi Bank.

Diversification Opportunities for Magyar Bancorp and Delhi Bank

-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between Magyar and Delhi is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Magyar Bancorp and Delhi Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delhi Bank Corp and Magyar Bancorp 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 Magyar Bancorp are associated (or correlated) with Delhi Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delhi Bank Corp has no effect on the direction of Magyar Bancorp i.e., Magyar Bancorp and Delhi Bank go up and down completely randomly.

Pair Corralation between Magyar Bancorp and Delhi Bank

Given the investment horizon of 90 days Magyar Bancorp is expected to generate 1.56 times more return on investment than Delhi Bank. However, Magyar Bancorp is 1.56 times more volatile than Delhi Bank Corp. It trades about 0.03 of its potential returns per unit of risk. Delhi Bank Corp is currently generating about 0.01 per unit of risk. If you would invest  1,238  in Magyar Bancorp on October 3, 2024 and sell it today you would earn a total of  222.00  from holding Magyar Bancorp or generate 17.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy75.05%
ValuesDaily Returns

Magyar Bancorp  vs.  Delhi Bank Corp

 Performance 
       Timeline  
Magyar Bancorp 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Magyar Bancorp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Magyar Bancorp reported solid returns over the last few months and may actually be approaching a breakup point.
Delhi Bank Corp 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Delhi Bank Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Delhi Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Magyar Bancorp and Delhi Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Magyar Bancorp and Delhi Bank

The main advantage of trading using opposite Magyar Bancorp and Delhi Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magyar Bancorp position performs unexpectedly, Delhi Bank 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 Delhi Bank will offset losses from the drop in Delhi Bank's long position.
The idea behind Magyar Bancorp and Delhi Bank Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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