Correlation Between Renasant and MT Bank

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

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

Diversification Opportunities for Renasant and MT Bank

0.89

Correlation Coefficient

Renasant  MT Bank

Very poor diversification

The 3 months correlation between Renasant and MTB is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Renasant and MT Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank and Renasant 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 Renasant are associated (or correlated) with MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank has no effect on the direction of Renasant i.e., Renasant and MT Bank go up and down completely randomly.

Pair Corralation between Renasant and MT Bank

Given the investment horizon of 90 days Renasant is expected to generate 2.01 times less return on investment than MT Bank. In addition to that, Renasant is 1.12 times more volatile than MT Bank. It trades about 0.04 of its total potential returns per unit of risk. MT Bank is currently generating about 0.09 per unit of volatility. If you would invest  12,917  in MT Bank on October 5, 2024 and sell it today you would earn a total of  5,955  from holding MT Bank or generate 46.1% return on investment over 90 days.

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

Renasant  vs.  MT Bank

Renasant

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Renasant are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Renasant unveiled solid returns over the last few months and may actually be approaching a breakup point.

MT Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MT Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MT Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Renasant and MT Bank

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

The idea behind Renasant and MT Bank 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 Global Correlations module to find global opportunities by holding instruments from different markets.