Correlation Between Automatic Bank and Menif Financial

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

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

Diversification Opportunities for Automatic Bank and Menif Financial

0.81

Correlation Coefficient

Automatic Bank  Menif Financial

Very poor diversification

The 3 months correlation between Automatic and Menif is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Bank Services and Menif Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Menif Financial Services and Automatic Bank 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 Automatic Bank Services are associated (or correlated) with Menif Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Menif Financial Services has no effect on the direction of Automatic Bank i.e., Automatic Bank and Menif Financial go up and down completely randomly.

Pair Corralation between Automatic Bank and Menif Financial

Assuming the 90 days trading horizon Automatic Bank is expected to generate 1.17 times less return on investment than Menif Financial. But when comparing it to its historical volatility, Automatic Bank Services is 1.03 times less risky than Menif Financial. It trades about 0.08 of its potential returns per unit of risk. Menif Financial Services is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  158,337  in Menif Financial Services on December 22, 2024 and sell it today you would earn a total of  16,263  from holding Menif Financial Services or generate 10.27% return on investment over 90 days.

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

Automatic Bank Services  vs.  Menif Financial Services

Automatic Bank Services

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Bank Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Automatic Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Menif Financial Services

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Menif Financial Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Menif Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Automatic Bank and Menif Financial

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

The idea behind Automatic Bank Services and Menif Financial Services 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.