Correlation Between Mifflinburg Bancorp and Bank of Utica

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

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

Diversification Opportunities for Mifflinburg Bancorp and Bank of Utica

0.55

Correlation Coefficient

Mifflinburg Bancorp  Bank of Utica

Very weak diversification

The 3 months correlation between Mifflinburg and Bank is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Mifflinburg Bancorp and Bank of Utica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Utica and Mifflinburg 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 Mifflinburg Bancorp are associated (or correlated) with Bank of Utica. 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 Utica has no effect on the direction of Mifflinburg Bancorp i.e., Mifflinburg Bancorp and Bank of Utica go up and down completely randomly.

Pair Corralation between Mifflinburg Bancorp and Bank of Utica

Given the investment horizon of 90 days Mifflinburg Bancorp is expected to generate 0.56 times more return on investment than Bank of Utica. However, Mifflinburg Bancorp is 1.78 times less risky than Bank of Utica. It trades about 0.03 of its potential returns per unit of risk. Bank of Utica is currently generating about -0.03 per unit of risk. If you would invest  2,355  in Mifflinburg Bancorp on December 29, 2024 and sell it today you would earn a total of  45.00  from holding Mifflinburg Bancorp or generate 1.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	84.38%
Values	Daily Returns

Mifflinburg Bancorp  vs.  Bank of Utica

Mifflinburg Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mifflinburg Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Mifflinburg Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Bank of Utica

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Mifflinburg Bancorp and Bank of Utica

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

The idea behind Mifflinburg Bancorp and Bank of Utica 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.