Correlation Between Mars Bancorp and MBT Bancshares

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

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

Diversification Opportunities for Mars Bancorp and MBT Bancshares

0.0

Correlation Coefficient

Mars Bancorp  MBT Bancshares

Pay attention - limited upside

The 3 months correlation between Mars and MBT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mars Bancorp and MBT Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBT Bancshares and Mars 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 Mars Bancorp are associated (or correlated) with MBT Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBT Bancshares has no effect on the direction of Mars Bancorp i.e., Mars Bancorp and MBT Bancshares go up and down completely randomly.

Pair Corralation between Mars Bancorp and MBT Bancshares

If you would invest (100.00) in Mars Bancorp on December 1, 2024 and sell it today you would earn a total of  100.00  from holding Mars Bancorp or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Mars Bancorp  vs.  MBT Bancshares

Mars Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mars Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Mars Bancorp is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

MBT Bancshares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MBT Bancshares are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady forward-looking signals, MBT Bancshares may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Mars Bancorp and MBT Bancshares

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

The idea behind Mars Bancorp and MBT Bancshares 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..