Correlation Between Mifflinburg Bancorp and Muncy Bank

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

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

Diversification Opportunities for Mifflinburg Bancorp and Muncy Bank

-0.29

Correlation Coefficient

Mifflinburg Bancorp  Muncy Bank

Very good diversification

The 3 months correlation between Mifflinburg and Muncy is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Mifflinburg Bancorp and Muncy Bank Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muncy Bank Financial 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 Muncy Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muncy Bank Financial has no effect on the direction of Mifflinburg Bancorp i.e., Mifflinburg Bancorp and Muncy Bank go up and down completely randomly.

Pair Corralation between Mifflinburg Bancorp and Muncy Bank

If you would invest  2,068  in Mifflinburg Bancorp on September 3, 2024 and sell it today you would earn a total of  202.00  from holding Mifflinburg Bancorp or generate 9.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Mifflinburg Bancorp  vs.  Muncy Bank Financial

Mifflinburg Bancorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mifflinburg Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Mifflinburg Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Muncy Bank Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Muncy Bank Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Muncy Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mifflinburg Bancorp and Muncy Bank

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

The idea behind Mifflinburg Bancorp and Muncy Bank Financial 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.