Correlation Between MNB Holdings and BankFirst Capital

Can any of the company-specific risk be diversified away by investing in both MNB Holdings and BankFirst Capital 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 MNB Holdings and BankFirst Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MNB Holdings Corp and BankFirst Capital, you can compare the effects of market volatilities on MNB Holdings and BankFirst Capital 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 MNB Holdings with a short position of BankFirst Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of MNB Holdings and BankFirst Capital.

Diversification Opportunities for MNB Holdings and BankFirst Capital

0.5

Correlation Coefficient

MNB Holdings  BankFirst Capital

Very weak diversification

The 3 months correlation between MNB and BankFirst is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding MNB Holdings Corp and BankFirst Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankFirst Capital and MNB Holdings 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 MNB Holdings Corp are associated (or correlated) with BankFirst Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankFirst Capital has no effect on the direction of MNB Holdings i.e., MNB Holdings and BankFirst Capital go up and down completely randomly.

Pair Corralation between MNB Holdings and BankFirst Capital

Given the investment horizon of 90 days MNB Holdings Corp is expected to under-perform the BankFirst Capital. But the otc stock apears to be less risky and, when comparing its historical volatility, MNB Holdings Corp is 1.02 times less risky than BankFirst Capital. The otc stock trades about -0.01 of its potential returns per unit of risk. The BankFirst Capital is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,048  in BankFirst Capital on October 11, 2024 and sell it today you would lose (62.00) from holding BankFirst Capital or give up 1.53% of portfolio value over 90 days.

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

MNB Holdings Corp  vs.  BankFirst Capital

MNB Holdings Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MNB Holdings Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental drivers, MNB Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BankFirst Capital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BankFirst Capital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, BankFirst Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MNB Holdings and BankFirst Capital

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

The idea behind MNB Holdings Corp and BankFirst Capital 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 Stocks Directory module to find actively traded stocks across global markets.