Correlation Between MNB Holdings and MF Bancorp

Can any of the company-specific risk be diversified away by investing in both MNB Holdings and MF Bancorp 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 MF Bancorp 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 MF Bancorp, you can compare the effects of market volatilities on MNB Holdings and MF Bancorp 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 MF Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of MNB Holdings and MF Bancorp.

Diversification Opportunities for MNB Holdings and MF Bancorp

0.35

Correlation Coefficient

MNB Holdings  MF Bancorp

Weak diversification

The 3 months correlation between MNB and MFBP is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding MNB Holdings Corp and MF Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MF Bancorp 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 MF Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MF Bancorp has no effect on the direction of MNB Holdings i.e., MNB Holdings and MF Bancorp go up and down completely randomly.

Pair Corralation between MNB Holdings and MF Bancorp

Given the investment horizon of 90 days MNB Holdings Corp is expected to generate 0.46 times more return on investment than MF Bancorp. However, MNB Holdings Corp is 2.19 times less risky than MF Bancorp. It trades about -0.05 of its potential returns per unit of risk. MF Bancorp is currently generating about -0.06 per unit of risk. If you would invest  2,450  in MNB Holdings Corp on August 30, 2024 and sell it today you would lose (75.00) from holding MNB Holdings Corp or give up 3.06% of portfolio value over 90 days.

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

MNB Holdings Corp  vs.  MF Bancorp

MNB Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MNB Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, MNB Holdings is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

MF Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MF Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with MNB Holdings and MF Bancorp

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

The idea behind MNB Holdings Corp and MF Bancorp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.