Correlation Between Mission Bancorp and Security Federal

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

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

Diversification Opportunities for Mission Bancorp and Security Federal

0.24

Correlation Coefficient

Mission Bancorp  Security Federal

Modest diversification

The 3 months correlation between Mission and Security is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Mission Bancorp and Security Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Federal and Mission 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 Mission Bancorp are associated (or correlated) with Security Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Federal has no effect on the direction of Mission Bancorp i.e., Mission Bancorp and Security Federal go up and down completely randomly.

Pair Corralation between Mission Bancorp and Security Federal

If you would invest  2,741  in Security Federal on August 30, 2024 and sell it today you would earn a total of  59.00  from holding Security Federal or generate 2.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Mission Bancorp  vs.  Security Federal

Mission Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mission Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Mission Bancorp is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Security Federal

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Security Federal are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Security Federal is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Mission Bancorp and Security Federal

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

The idea behind Mission Bancorp and Security Federal 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.